EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Bluestem Group Inc. (OTCMKTS: BGRP) today reported unaudited consolidated financial results that include its wholly-owned subsidiary, Bluestem Brands, Inc. and its subsidiaries (“Bluestem”), for the 13- and 52- week periods ended January 29, 2016 and January 30, 2015. We refer to the 13-week periods in this release as the “fourth quarter” and the 52-week periods as the “fiscal” year. Bluestem is a multi-brand, online retailer of a broad selection of name-brand and private label general merchandise serving low- to middle-income consumers nationwide.
“Bluestem Group had another solid quarter. Not only did Bluestem Brands, Inc. experience record sales and profit for the fourth quarter, but we also made significant progress on the integration of the Orchard Brands acquisition. We delivered fourth quarter net retail sales of $737.7 million and our credit portfolio performance continues to improve on a year over year basis; the net principal loss rate in the fourth quarter was 17.8%, representing a 143 basis point improvement over the fourth quarter of fiscal 2014. In addition, earlier this week our Board of Directors authorized the repurchase of up to 4.5 million shares to reinforce our belief that the company’s current stock price does not reflect the intrinsic value of the company,” said Steve Nave, Bluestem Group’s Chief Executive Officer.
Fourth Quarter and Fiscal 2015 Bluestem Group Consolidated Highlights – Includes Bluestem Brands Inc. beginning November 7, 2014, and Orchard Brands Corporation beginning July 10, 2015
- Adjusted EBITDA for the fourth quarter of fiscal 2015 was $80.6 million compared to $63.4 million in the fourth quarter of fiscal 2014 and $137.4 million for fiscal 2015 compared to $89.8 million for fiscal 2014.
- Income from continuing operations after income taxes for the fourth quarter of fiscal 2015 was $8.2 million compared to $58.7 million for the fourth quarter of fiscal 2014. Diluted income per share from continuing operations was $0.06 for the fourth quarter of fiscal 2015, compared to $0.43 for the fourth quarter of fiscal 2014. Reducing fiscal 2015 fourth quarter net income was a $6.5 million non-cash loss from derivatives in our own equity and a $20.2 million non-cash Gettington tradename impairment charge.
- Income from continuing operations after income taxes for fiscal 2015 was $14.2 million compared to $70.0 million for fiscal 2014. Diluted income per share from continuing operations was $0.10 for fiscal 2015, compared to $0.69 for fiscal 2014. The decrease in diluted income per share from continuing operations in fiscal 2015 was driven by the Gettington tradename impairment charge and decline in net gains from our real estate related assets and businesses of $17.2 million.
- Net gain on loans held for sale, investments available-for-sale, and equity in income of joint ventures and partnership were $5.9 million and commercial real estate related asset proceeds were $14.9 million in the fourth quarter of fiscal 2015. Net gain on loans held for sale, investments available-for-sale, and equity income of joint ventures and partnership in fiscal 2015 were $15.6 million and commercial real estate related asset proceeds were $97.5 million for fiscal 2015. Fiscal 2015 proceeds included $39.8 million from the Federal Home Loan Bank (“FHLB”) full redemption of the Company’s outstanding shares of regulatory-restricted mandatorily redeemable capital stock at par. As of the end of the fiscal year, the company had $64.9 million in net commercial real estate assets remaining versus $105.4 million at the end of fiscal 2014.
- Cash and cash equivalents were $185.9 million as of January 29, 2016.
Fourth Quarter and Fiscal 2015 Bluestem Stand-alone Highlights – Includes Orchard Brands Corporation beginning July 10, 2015
- Net sales for the fourth quarter of fiscal 2015 were $737.7 million, including $253.3 million of net sales from the Orchard Portfolio, a 61.6% increase over net sales of $456.5 million for the fourth quarter of fiscal 2014. Net sales for fiscal 2015 were $1,720.2 million, including $535.9 million of net sales from the Orchard Portfolio, a 60.5% increase over net sales of $1,071.5 million for fiscal 2014.
- Bluestem’s adjusted EBITDA in the fourth quarter of fiscal 2015 was $76.4 million compared to adjusted EBITDA of $56.6 million for the fourth quarter of fiscal 2014. Bluestem’s adjusted EBITDA for fiscal 2015 was $130.8 million compared to adjusted EBITDA of $119.9 million for fiscal 2014.
- Excluding the impact of the Orchard Brands acquisition, Bluestem’s net sales for the fourth quarter of fiscal 2015 were $484.4 million, a 6.1% increase compared to $456.5 million in the fourth quarter of fiscal 2014. Bluestem Legacy Portfolio net sales for fiscal 2015 were $1,184.2 million, a 10.5% increase compared to $1,071.5 million in fiscal 2014.
- Orchard Portfolio’s net sales for the fourth quarter of fiscal 2015 were $253.3 million, a decrease of 5.7% compared to Orchard net sales of $268.5 million for the 13 weeks ended January 24, 2015.
- Fingerhut and Gettington active accounts increased to 1.7 million as of the end of fiscal 2015, a 5.6% increase over 1.6 million as of the end of fiscal 2014.
- 30+ day delinquent balances on the revolving portfolio were 14.7% at the end of fiscal 2015 and 2014.
- Net principal charge-off rate on the revolving portfolio was 17.8% for the fourth quarter of fiscal 2015 compared to 19.2% for the fourth quarter of fiscal 2014.
- Orchard Portfolio’s active customers were 7.8 million for the 53 weeks ended January 29, 2016 and 7.9 million for the 52 weeks ended January 24, 2015.
Stock Repurchase Authorization
The Board of Directors has
authorized the repurchase of up to 4.5 million shares of its outstanding
common stock in one or more transactions occurring on or prior to March
28, 2017. The repurchase authorization also has received the approval of
Bluestem Group’s Series A Preferred stockholders as required by the
Company’s articles of incorporation and investment agreement with the
Centerbridge Partners affiliates party to the agreement. Under the
repurchase authorization, shares may be repurchased in open-market
purchases or in privately negotiated transactions in compliance with
Securities and Exchange Commission Rule 10b-18. The extent to which
shares, if any, are repurchased and the timing of such repurchases, will
depend upon a variety of factors including, but not limited to, market
conditions, applicable legal requirements, and other corporate
considerations, as determined by Bluestem Group’s Board of Directors.
The repurchase authorization may be suspended or discontinued at any
time. Bluestem Group expects to finance the purchases with existing cash
on-hand. Shares of common stock acquired through the repurchase
authorization will be retired and restored to the status of authorized
and unissued shares.
Receipt of Civil Investigation Demand
On January 19, 2016,
Bluestem Brands, Inc. received a Civil Investigative Demand (a “CID”)
from the Consumer Financial Protection Bureau (the “CFPB”). The CID
requests the production of documents, answers to written questions and
oral testimony related to debt collection and the selling of debt
portfolios. We are cooperating with the CFPB in this investigation and
are in the process of providing our responses to the CID.
New Member of the BGRP Board of Directors
Alberto Sanchez
was elected by Bluestem Group’s Series A Preferred stockholders to join
the Board of Directors effective February 24, 2016. Mr. Sanchez replaces
Brian Libman who had served the company since December 2014 and recently
resigned from the Board in order to devote additional time and resources
to his other professional endeavors. Mr. Sanchez, worked at Grupo
Santander from 1997 until 2015. For the last 10 years he was the bank’s
Head of Investment Strategy for the Americas and became Vice-Chairman of
Santander Consumer USA, Board member of Santander Holdings USA,
Santander Bank N.A. (formerly Sovereign Bank), and Santander Investment
Securities. From 1997 to 2005 he ran the Southern European Equities
Research team and later the Latin America Equities Division. “Alberto
brings a wealth of talent, expertise and energy to our Board of
Directors. We are very fortunate to have him as part of the team as we
grow our business”, said Eugene Davis, Executive Chairman of the Board.
All financial information included in this release is unaudited. Information for Bluestem Group is presented on a consolidated basis, including Bluestem Brands Inc., beginning November 7, 2014 and Orchard Brands Corporation beginning July 10, 2015. Consolidated information for Bluestem Group’s wholly-owned subsidiary, Bluestem Brands Inc., is also presented on a stand-alone basis. The acquisitions of Bluestem Brands and Orchard were accounted for as business combinations.
Adjusted EBITDA is defined in the accompanying financial information of Bluestem Group and Bluestem Brands. Please see “Bluestem Group Inc. and Bluestem Brands, Inc. Financial Information-Overview and Basis of Presentation” below and accompanying disclosures for a more detailed explanation of the foregoing matters, reconciliations to results reported under GAAP and other important information for investors to consider.
Earnings Teleconference Information
Steve Nave, CEO, and
Mark Wagener, CFO, will host a conference call at 9:00AM ET on Friday,
April 1, 2016 to discuss the company’s 13- and 52-week periods ended
January 29, 2016. The conference call can be accessed at (888) 329-8893
or (719) 457-2648 (International), conference ID # 4205485 and will be
broadcast simultaneously at http://www.bluestem.com/investor-relations.
Following completion of the call, a recorded replay of the webcast will
be available on Bluestem’s website. To listen to the telephone replay,
call toll-free (877) 870-5176 or (858) 384-5517 (International), replay
pin # 4205485. The telephone replay will be available at 12:00 PM ET
April 1, 2016. Additional investor information can be accessed at http://www.bluestem.com/investor-relations.
About Bluestem Group
Bluestem Group Inc. is a holding
company whose businesses include Bluestem Brands, a multi-brand, online
retailer of a broad selection of name-brand and private label general
merchandise serving low- to middle-income consumers through 16 retail
brands that include: Appleseed’s, Bedford Fair, Blair, Draper’s &
Damon’s, Fingerhut, Gettington, Gold Violin, Haband, LinenSource, Norm
Thompson, Old Pueblo Traders, PayCheck Direct, Sahalie, Solutions, Tog
Shop and Wintersilks. Complementing each brand is a large selection of
merchandise with payment options that provide customers with the
flexibility of paying over time. Bluestem Group is headquartered in Eden
Prairie, MN. For additional information visit the Bluestem Group website
at www.bluestem.com.
Forward Looking Statements
This release contains statements
that are “forward-looking statements”. Forward-looking statements relate
to expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning matters
that are not historical facts. All statements contained herein that are
not clearly historical in nature are forward-looking. In some cases, you
can identify these statements by use of forward-looking words such as
“may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “plan,”
“believe,” “predict,” “potential,” “project,” “intend,” “could” or
similar expressions. In particular, statements regarding Bluestem
Group’s plans, strategies, prospects and expectations regarding its
business are forward-looking statements. You should be aware that these
statements and any other forward-looking statements in this document
only reflect Bluestem Group’s beliefs, assumptions and expectations and
are not guarantees of performance. These statements involve risks,
uncertainties and assumptions. Many of these risks, uncertainties and
assumptions are beyond Bluestem Group’s control and may cause actual
results and performance to differ materially from Bluestem Group’s
expectations.
Forward-looking statements are based on Bluestem Group’s beliefs, assumptions and expectations of its future performance and actions, taking into account all information currently available to Bluestem Group. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to Bluestem Group or are within its control. If a change occurs, Bluestem Group’s plans, business, financial condition, and liquidity may vary materially from those expressed in its forward-looking statements. Important factors that could cause the actual results to be materially different from Bluestem Group’s expectations include the risks and uncertainties set forth in “Risk Factors” in Bluestem Group’s Report as of and for the fiscal years ended January 30, 2015 and January 31, 2014, as updated by its subsequent periodic reports.
Accordingly, you should not place undue reliance on the forward-looking statements contained in this release. These forward-looking statements are made only as of the date of this release. Bluestem Group undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
BLUESTEM GROUP INC.
BLUESTEM BRANDS, INC.
FINANCIAL
INFORMATION
13 and 52 weeks ended January 29, 2016 and
January 30, 2015
Overview and Basis of Presentation
The accompanying
financial information for Bluestem Group, Inc. (“Bluestem Group”) is
presented on a consolidated basis, including Bluestem Brands, Inc.
(“Bluestem”) and its consolidated subsidiaries beginning November 7,
2014 and Orchard Brands Corporation (“Orchard”) and its consolidated
subsidiaries beginning July 10, 2015. The accompanying financial
information for Bluestem Group’s wholly-owned subsidiary, Bluestem, is
also presented on a stand-alone basis. The acquisitions of Bluestem and
Orchard were accounted for as business combinations. Bluestem’s purchase
price allocation for its acquisition of Orchard was finalized in the
fourth quarter of fiscal 2015, and all quarters preceding the fourth
quarter from the Orchard acquisition date have been adjusted to reflect
the final allocation. All financial information included in this release
is unaudited.
Bluestem Group Consolidated Financial Information
On
November 7, 2014, Bluestem Group Inc. (f/k/a Capmark Financial Group
Inc.) acquired Bluestem. As a result, the financial results of Bluestem
for the 13- and 52-week periods ended January 29, 2016 and for the
period from November 7, 2014 through January 30, 2015 were included in
Bluestem Group’s consolidated results. The acquisition of Bluestem was
accounted for as a business combination.
In December 2014, Bluestem Group changed its fiscal year from December 31 to the Friday closest to January 31 of the following year to conform to the fiscal year of Bluestem. Bluestem operates on a fiscal calendar widely used by the retail industry that results in fiscal years consisting of 52- or 53-weeks ending on the Friday closest to January 31 of the following year.
On June 18, 2015 Capmark Financial Group Inc. changed its name to Bluestem Group Inc. and began trading on the OTC marketplace under the symbol BGRP on June 19, 2015.
On July 10, 2015, Bluestem acquired Orchard Brands Corporation. Information for the Orchard portfolio is presented in Bluestem’s consolidated financial information beginning July 10, 2015.
To supplement the historical financial data derived from Bluestem Group’s consolidated financial statements, which are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, this release uses adjusted EBITDA, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share of Bluestem Group as non-GAAP performance measures. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP. Please see the accompanying report on Bluestem Group’s results of operations for further important information concerning these measures.
Bluestem Stand-alone Financial Information
As
previously discussed, the acquisition of Bluestem was accounted for as a
business combination. By the application of “push down” accounting,
Bluestem’s assets and liabilities were adjusted to fair value as of
November 7, 2014. The accompanying Bluestem financial results are
presented as “Predecessor” or “Successor” to indicate the period
preceding the acquisition or the period succeeding the acquisition,
respectively.
To supplement the historical financial data derived from Bluestem’s consolidated financial statements, which are prepared in accordance with GAAP, this release includes adjusted EBITDA, adjusted pro forma EBITDA, contribution margin, adjusted general and administrative expenses and free cash flow, as non-GAAP performance measures. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP. Please see the accompanying report on Bluestem’s results of operations for further important information concerning these measures.
Orchard Brands Corporation Stand-alone Financial
Information
The financial information in the accompanying
report on Bluestem’s results of operations for the 13 and 52 weeks ended
January 29, 2016 includes historical results of Orchard Brands
Corporation and its subsidiaries for the 13 weeks ended June 27, 2015,
March 28, 2015, December 27, 2014, September 27, 2014, June 28, 2014 and
March 29, 2014 (collectively the “Six Quarters of Historical Orchard
Results”). The Six Quarters of Historical Orchard Results are presented
in accordance with GAAP and based on historical Orchard Brands
Corporation's basis of presentation. The Six Quarters of Historical
Orchard Results are based on the historical Orchard Brands Corporation
fiscal second quarter ended June 27, 2015, first quarter ended March 28,
2015 and fiscal year ended December 27, 2014.
To supplement the historical financial data derived from the historical results of Orchard Brands Corporation the accompanying report uses adjusted EBITDA and free cash flow measures. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP. The accompanying report also uses adjusted net sales, adjusted gross profit, adjusted selling and marketing expenses and adjusted general and administrative expenses. These measures are conformed to Bluestem Brands, Inc. basis of presentation for comparison purposes. Bluestem Brands, Inc.'s basis of presentation is in accordance with GAAP. The financial results of the Orchard Portfolio for periods succeeding the acquisition of Orchard Brands Corporation on July 10, 2015 will be presented on Bluestem Brands, Inc.'s basis of presentation. Please see the accompanying report on Orchard Brands Corporation’s results of operations for the Six Quarters of Historical Orchard Results for further important information concerning these measures.
|
BLUESTEM GROUP INC. Consolidated Statements of Comprehensive Income (unaudited — in thousands, except shares and per share amounts) |
||||||||||||||||||||
| 13-Weeks Ended | Fiscal Years Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | |||||||||||||||||
| Net sales and revenue | ||||||||||||||||||||
| Net retail sales | $ | 737,682 | $ | 432,392 | $ | 1,720,189 | $ | 432,392 | ||||||||||||
| Commercial real estate revenue | ||||||||||||||||||||
| Net interest income | 891 | 1,734 | 2,732 | 6,609 | ||||||||||||||||
| Net gains on investments available for sale | 48 | 33 | 722 | 15,978 | ||||||||||||||||
| Other noninterest income | 5,828 | 8,295 | 19,398 | 23,505 | ||||||||||||||||
| Total net sales and revenue | 744,449 | 442,454 | 1,743,041 | 478,484 | ||||||||||||||||
| Costs and expenses | ||||||||||||||||||||
| Retail cost of goods sold | 403,947 | 256,885 | 937,841 | 256,885 | ||||||||||||||||
| Retail sales and marketing expenses | 166,657 | 69,128 | 412,234 | 69,128 | ||||||||||||||||
| Retail net credit expense | 32,784 | 18,011 | 64,035 | 18,011 | ||||||||||||||||
| Commercial real estate operating expenses | 258 | 833 | 2,158 | 4,901 | ||||||||||||||||
| General and administrative expenses | 65,267 | 64,837 | 211,686 | 85,289 | ||||||||||||||||
| Amortization and depreciation not included in | ||||||||||||||||||||
|
retail cost of goods sold |
53,163 | 21,573 | 98,383 | 21,627 | ||||||||||||||||
| Loss from derivatives in our own equity | 6,489 | 15,353 | 183 | 15,353 | ||||||||||||||||
| Total costs and expenses | 728,565 | 446,620 | 1,726,520 | 471,194 | ||||||||||||||||
|
Operating income (loss) |
15,884 | (4,166 | ) | 16,521 | 7,290 | |||||||||||||||
| Retail interest expense, net | 13,701 | 7,091 | 43,920 | 7,091 | ||||||||||||||||
| (Loss) income from continuing operations before income taxes | 2,183 | (11,257 | ) | (27,399 | ) | 199 | ||||||||||||||
| Income tax benefit | (6,065 | ) | (69,969 | ) | (41,614 | ) | (69,770 | ) | ||||||||||||
| Income from continuing operations after income taxes | 8,248 | 58,712 | 14,215 | 69,969 | ||||||||||||||||
| Income from discontinued operations, net of tax | - | - | - | 33,037 | ||||||||||||||||
| Net income | 8,248 | 58,712 | 14,215 | 103,006 | ||||||||||||||||
| Net loss attributable to noncontrolling interests | - | - | - | 5,930 | ||||||||||||||||
| Net income attributable to Bluestem Group Inc. | 8,248 | 58,712 | 14,215 | 108,936 | ||||||||||||||||
| Other comprehensive (loss) income | ||||||||||||||||||||
| Net change in unrealized gains and losses | ||||||||||||||||||||
| on investment securities | (638 | ) | 54 | (633 | ) | (737 | ) | |||||||||||||
| Comprehensive income attributable to Bluestem Group Inc. | $ | 7,610 | $ | 58,766 | $ | 13,582 | $ | 108,199 | ||||||||||||
| Basic and diluted income per share - common stockholders | ||||||||||||||||||||
| Basic and diluted income per share from continuing operations | $ | 0.06 | $ | 0.43 | $ | 0.10 | $ | 0.69 | ||||||||||||
| Basic income per share attributable to Bluestem Group Inc. | $ | 0.06 | $ | 0.43 | $ | 0.10 | $ | 1.00 | ||||||||||||
| Diluted income per share attributable to Bluestem Group Inc. | $ | 0.06 | $ | 0.43 | $ | 0.10 | $ | 0.99 | ||||||||||||
| Basic weighted average shares outstanding | 136,382,570 | 133,657,808 | 136,202,218 | 108,277,257 | ||||||||||||||||
| Diluted weighted average shares outstanding | 137,824,323 | 135,124,471 | 137,748,265 | 109,335,400 | ||||||||||||||||
|
BLUESTEM GROUP INC. Condensed Consolidated Balance Sheets (in thousands) |
|||||||||||
| January 29, 2016 | January 30, 2015 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 185,944 | $ | 254,207 | |||||||
| Restricted cash | 22,569 | 13,586 | |||||||||
| Customer accounts receivable, net of allowance of $14,434 and $10,457 | 44,446 | 36,494 | |||||||||
| Retail merchandise inventories | 263,579 | 96,431 | |||||||||
| Promotional material inventories | 53,253 | 13,976 | |||||||||
| Other current assets | 49,233 | 43,398 | |||||||||
| Total current assets | 619,024 | 458,092 | |||||||||
| Loans held-for-sale | 23,146 | 78,080 | |||||||||
| Equity investments | 47,748 | 114,736 | |||||||||
| Property and equipment, net | 125,001 | 49,755 | |||||||||
| Intangibles, net | 460,551 | 377,892 | |||||||||
| Goodwill | 367,481 | 201,642 | |||||||||
| Other assets | 14,891 | 21,195 | |||||||||
| Total Assets | $ | 1,657,842 | $ | 1,301,392 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 180,601 | $ | 82,037 | |||||||
| Accrued costs and other liabilities | 129,361 | 92,823 | |||||||||
| Short-term debt | 47,981 | 17,787 | |||||||||
| Total current liabilities | 357,943 | 192,647 | |||||||||
| Long-term debt | 513,847 | 354,204 | |||||||||
| Deferred income taxes | 98,275 | 79,948 | |||||||||
| Other long-term liabilities | 14,531 | 20,038 | |||||||||
| Total liabilities | 984,596 | 646,837 | |||||||||
| Stockholders' Equity: | |||||||||||
| Series A participating convertible preferred stock | 4,970 | 4,856 | |||||||||
| Common stock | 1,366 | 1,364 | |||||||||
| Treasury stock | (131 | ) | - | ||||||||
| Additional paid-in capital | 361,935 | 356,697 | |||||||||
| Retained earnings | 304,875 | 290,774 | |||||||||
| Accumulated other comprehensive income, net of tax | 231 | 864 | |||||||||
| Total Bluestem Group Inc. stockholders’ equity | 673,246 | 654,555 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,657,842 | $ | 1,301,392 | |||||||
|
BLUESTEM GROUP INC. Consolidated Statements of Cash Flows (unaudited — in thousands) |
||||||||||||||||||||
| 13-Weeks Ended | Fiscal Years Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | |||||||||||||||||
| Operating Activities of Continuing Operations | ||||||||||||||||||||
| Net income | $ | 8,248 | $ | 58,712 | $ | 14,215 | $ | 103,006 | ||||||||||||
| Income from discontinued operations | - | - | - | 33,037 | ||||||||||||||||
| Net income from continuing operations | 8,248 | 58,712 | 14,215 | 69,969 | ||||||||||||||||
| Adjustments to reconcile net income from continuing operations to | ||||||||||||||||||||
| net cash provided by operating activities of continuing operations: | ||||||||||||||||||||
| Provision for deferred income taxes | (4,798 | ) | (48,778 | ) | (39,199 | ) | (48,047 | ) | ||||||||||||
| Uncertain tax positions | 691 | (18,699 | ) | 370 | (18,699 | ) | ||||||||||||||
| Net losses (gains) on loans held for sale, investment securities and other | 325 | 27 | (10,773 | ) | (17,722 | ) | ||||||||||||||
| Equity in net gains investees and cash return on investment | (5,858 | ) | (6,797 | ) | (8,323 | ) | (11,330 | ) | ||||||||||||
| Amortization and depreciation expense | 54,266 | 21,831 | 101,327 | 21,885 | ||||||||||||||||
| Loss from derivatives in our own equity | 6,489 | 15,353 | 183 | 15,353 | ||||||||||||||||
| Provision for doubtful accounts | 20,409 | 10,510 | 31,204 | 10,510 | ||||||||||||||||
| Provision for retail merchandise returns | 35,743 | 11,455 | 83,824 | 11,455 | ||||||||||||||||
| Stock-based compensation expense | 1,360 | 21,809 | 5,393 | 23,773 | ||||||||||||||||
| Inventory obsolescence and other reserves | 17,343 | 11,285 | 45,701 | 11,285 | ||||||||||||||||
| Other, net | 1,412 | 899 | 4,724 | 933 | ||||||||||||||||
| Net change in assets and liabilities which provided (used) cash: | ||||||||||||||||||||
| Customer account receivables, net | (65,286 | ) | (35,728 | ) | (101,631 | ) | (30,863 | ) | ||||||||||||
| Retail merchandise inventories | 75,693 | 78,895 | (6,695 | ) | 78,895 | |||||||||||||||
| Other assets | 32,110 | 15,399 | (10,161 | ) | 17,043 | |||||||||||||||
| Accounts payable and other liabilities | (107,189 | ) | (57,975 | ) | (75,926 | ) | (61,671 | ) | ||||||||||||
| Payments from loans held for sale | 42 | 4,996 | 60,940 | 26,281 | ||||||||||||||||
| Net cash provided by operating activities of continuing operations | 71,000 | 83,194 | 95,173 | 99,050 | ||||||||||||||||
| Investing Activities of Continuing Operations | ||||||||||||||||||||
| Net (increase) decrease in restricted cash | (4,360 | ) | 7,761 | (8,983 | ) | 12,331 | ||||||||||||||
| Proceeds from repayments of investment securities classified as available-for-sale | 48 | - | 722 | 15,972 | ||||||||||||||||
| Distributions from equity investments | 14,134 | 13,307 | 75,009 | 73,105 | ||||||||||||||||
| Purchases of customer accounts receivable | (480,238 | ) | (430,600 | ) | (1,197,537 | ) | (430,600 | ) | ||||||||||||
| Proceeds from sale of customer accounts receivable | 480,496 | 430,949 | 1,198,146 | 430,949 | ||||||||||||||||
| Acquisition, net of cash on hand | 6,261 | (509,796 | ) | (375,313 | ) | (509,796 | ) | |||||||||||||
| Net purchases of property and equipment | (11,343 | ) | (5,349 | ) | (35,935 | ) | (688 | ) | ||||||||||||
| Net cash provided by (used in) investing activities of continuing operations | 4,998 | (493,728 | ) | (343,891 | ) | (408,727 | ) | |||||||||||||
| Financing Activities of Continuing Operations | ||||||||||||||||||||
| Borrowings of debt | - | 281,064 | 269,246 | 281,064 | ||||||||||||||||
| Repayments of debt | (7,690 | ) | (6,739 | ) | (100,782 | ) | (25,961 | ) | ||||||||||||
| Borrowings on asset backed line of credit | 111,667 | 180,287 | 481,712 | 180,287 | ||||||||||||||||
| Repayments on asset backed line of credit | (172,105 | ) | (182,676 | ) | (469,425 | ) | (182,676 | ) | ||||||||||||
| Settlement of Bluestem Brands Selling Stockholders' acquisition-related liabilities | - | (66,362 | ) | - | (66,362 | ) | ||||||||||||||
| Proceeds from issuance of preferred stock | - | - | - | 5,000 | ||||||||||||||||
| Proceeds from issuance of common stock | - | 143,988 | - | 143,988 | ||||||||||||||||
| Treasury shares repurchased | - | - | (131 | ) | - | |||||||||||||||
| Net cash (used in) provided by financing activities of continuing operations | (68,128 | ) | 349,562 | 180,620 | 335,340 | |||||||||||||||
| Effect of Foreign Exchange Rates on Cash | (51 | ) | (242 | ) | (165 | ) | (297 | ) | ||||||||||||
| Discontinued Operations | ||||||||||||||||||||
| Net cash used in operating activities of discontinued operations | - | - | - | (6,313 | ) | |||||||||||||||
| Net cash provided by investing activities of discontinued operations | - | - | - | 65,710 | ||||||||||||||||
| Net cash provided by discontinued operations | - | - | - | 59,397 | ||||||||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 7,819 | (61,214 | ) | (68,263 | ) | 84,763 | ||||||||||||||
| Cash and Cash Equivalents, Beginning of Period | 178,125 | 315,421 | 254,207 | 169,444 | ||||||||||||||||
| Cash and Cash Equivalents, End of Period | $ | 185,944 | $ | 254,207 | $ | 185,944 | $ | 254,207 | ||||||||||||
BLUESTEM GROUP INC.
Non-GAAP Financial Measures
(unaudited — in thousands, except shares and per share data)
To supplement the consolidated financial statements of Bluestem Group Inc. and its subsidiaries which are presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") we use the following measures that are not in accordance with, or an alternative to, measures prepared in accordance with GAAP ("non-GAAP measures"):
Adjusted EBITDA, as presented, represents net income attributable to Bluestem Group Inc. before retail interest expense, income tax benefit, amortization and depreciation expense, stock-based compensation expense, loss from derivatives in our own equity, acquisition transaction costs, integration costs, costs related to the Centerbridge Investment Agreement and income from discontinued operations, net of tax.
Non-GAAP net income, as we present it, represents net income attributable to Bluestem Group Inc. before amortization of acquired intangible assets, stock-based compensation expense, loss from derivatives in our own equity, acquisition transaction costs, integration costs, costs related to the Centerbridge Investment Agreement, income from discontinued operations, net of tax, tax effects of the foregoing adjustments and Orchard acquisition and deferred tax valuation allowance and recognition of uncertain tax positions.
Non-GAAP diluted income per share, as we present it, represents diluted income per share before amortization of acquired intangible assets, stock-based compensation expense, loss from derivatives in our own equity, acquisition transaction costs, integration costs, costs related to the Centerbridge Investment Agreement, income from discontinued operations, net of tax, tax effects of the foregoing adjustments and Orchard acquisition and deferred tax valuation allowance and recognition of uncertain tax positions.
We provide these measures because we believe they are useful to investors in evaluating our operating performance compared to other companies in our industry. As non-GAAP measures, they have limitations in that they do not reflect all of the amounts associated with Bluestem Group Inc.'s results of operations as determined in accordance with GAAP and are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP. In addition, our calculations of Adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share may not be comparable to the calculations of such measures by other companies.
| 13 Weeks Ended | Fiscal Years Ended | ||||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | ||||||||||||||||||
| Adjusted EBITDA reconciliation to GAAP net income: | |||||||||||||||||||||
| Net income attributable to Bluestem Group Inc. | $ | 8,248 | $ | 58,712 | $ | 14,215 | $ | 108,936 | |||||||||||||
| Retail interest expense | 13,704 | 7,091 | 43,927 | 7,091 | |||||||||||||||||
| Income tax benefit | (6,065 | ) | (69,969 | ) | (41,614 | ) | (69,770 | ) | |||||||||||||
| Amortization and depreciation expense | 54,266 | 21,831 | 101,327 | 21,885 | |||||||||||||||||
| Stock-based compensation expense | 1,360 | 21,809 | 5,393 | 23,773 | |||||||||||||||||
| Loss from derivatives in our own equity | 6,489 | 15,353 | 183 | 15,353 | |||||||||||||||||
| Acquisition transaction costs | - | 8,533 | 8,342 | 9,926 | |||||||||||||||||
| Integration costs | 2,635 | - | 5,607 | - | |||||||||||||||||
| Costs related to Centerbridge Investment Agreement | - | 70 | - | 5,666 | |||||||||||||||||
| Income from discontinued operations, net of tax | - | - | - | (33,037 | ) | ||||||||||||||||
| Adjusted EBITDA | $ | 80,637 | $ | 63,430 | $ | 137,380 | $ | 89,823 | |||||||||||||
| GAAP net income attributable to Bluestem Group Inc. | $ | 8,248 | $ | 58,712 | $ | 14,215 | $ | 108,936 | |||||||||||||
| Adjustments: | |||||||||||||||||||||
| Amortization of acquired intangible assets | 46,511 | 18,300 | 76,501 | 18,300 | |||||||||||||||||
| Stock-based compensation expense | 1,360 | 21,809 | 5,393 | 23,773 | |||||||||||||||||
| Loss from derivatives in our own equity | 6,489 | 15,353 | 183 | 15,353 | |||||||||||||||||
| Acquisition transaction costs | - | 8,533 | 8,342 | 9,926 | |||||||||||||||||
| Integration costs | 2,635 | - | 5,607 | - | |||||||||||||||||
| Costs related to Centerbridge Investment Agreement | - | 70 | - | 5,666 | |||||||||||||||||
| Income from discountinued operations, net of tax | - | - | - | (33,037 | ) | ||||||||||||||||
| Tax effect of adjustments | (7,557 | ) | (1,074 | ) | (7,557 | ) | (1,225 | ) | |||||||||||||
| Tax effect of Orchard business combination | - | - | (34,963 | ) | - | ||||||||||||||||
| Deferred tax valuation allowance and recognized uncertain tax positions | - | (84,317 | ) | - | (90,529 | ) | |||||||||||||||
| Non-GAAP net income attributable to Bluestem Group Inc. | $ | 57,686 | $ | 37,386 | $ | 67,721 | $ | 57,163 | |||||||||||||
| GAAP diluted income per share available | |||||||||||||||||||||
| to common stockholders | $ | 0.06 | $ | 0.43 | $ | 0.10 | $ | 0.99 | |||||||||||||
| Adjustments: | |||||||||||||||||||||
| Amortization of acquired intangible assets | 0.34 | 0.14 | 0.56 | 0.17 | |||||||||||||||||
| Stock-based compensation expense | 0.01 | 0.16 | 0.04 | 0.22 | |||||||||||||||||
| Loss from derivatives in our own equity | 0.05 | 0.11 | - | 0.14 | |||||||||||||||||
| Acquisition transaction costs | - | 0.06 | 0.06 | 0.09 | |||||||||||||||||
| Integration costs | 0.02 | - | 0.04 | - | |||||||||||||||||
| Costs related to Centerbridge Investment Agreement | - | - | - | 0.05 | |||||||||||||||||
| Income from discountinued operations, net of tax | - | - | - | (0.30 | ) | ||||||||||||||||
| Tax effect of adjustments | (0.05 | ) | (0.01 | ) | (0.05 | ) | (0.01 | ) | |||||||||||||
| Tax effect of Orchard business combination | - | - | (0.25 | ) | - | ||||||||||||||||
| Deferred tax valuation allowance and recognized uncertain tax positions | - | (0.62 | ) | - | (0.83 | ) | |||||||||||||||
| Non-GAAP diluted income per share available | |||||||||||||||||||||
| to common stockholders | $ | 0.43 | $ | 0.27 | $ | 0.50 | $ | 0.52 | |||||||||||||
| Diluted weighted average shares outstanding | 137,824,323 | 135,124,471 | 137,748,265 | 109,335,400 | |||||||||||||||||
|
BLUESTEM BRANDS, INC. |
||||||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
Change (a) |
|
|||||||||||||||||||||
|
(13 Weeks Ended) |
||||||||||||||||||||||||||
| Net sales | $ | 737,682 | $ | 456,474 | $ | 432,392 | $ | 24,082 | 61.6 | % | ||||||||||||||||
| Cost of goods sold | 403,947 | 271,635 | 256,885 | 14,750 | 48.7 | % | ||||||||||||||||||||
| Gross profit | 333,735 | 184,839 | 175,507 | 9,332 | 80.6 | % | ||||||||||||||||||||
| Sales and marketing expenses | 166,657 | 74,010 | 69,128 | 4,882 | 125.2 | % | ||||||||||||||||||||
| Net credit expense | 32,784 | 20,713 | 18,011 | 2,702 | 58.3 | % | ||||||||||||||||||||
| General and administrative expenses | 63,272 | 63,116 | 34,466 | 28,650 | 0.2 | % | ||||||||||||||||||||
| Amortization and depreciation not included in | ||||||||||||||||||||||||||
| cost of goods sold (b) | 53,163 | 21,847 | 21,573 | 274 | 143.3 | % | ||||||||||||||||||||
| Loss on early extinguishment of debt | - | 9,298 | - | 9,298 | n/m | |||||||||||||||||||||
| Interest expense, net (c) | 13,701 | 7,419 | 7,091 | 328 | 84.7 | % | ||||||||||||||||||||
| Income (loss) before income taxes | 4,158 | (11,564 | ) | 25,238 | (36,802 | ) | (136.0 | )% | ||||||||||||||||||
| Income tax expense (benefit) | 10,971 | (2,960 | ) | 9,222 | (12,182 | ) | (470.6 | )% | ||||||||||||||||||
| Net (loss) income | $ | (6,813 | ) | $ | (8,604 | ) | $ | 16,016 | $ | (24,620 | ) | (20.8 | )% | |||||||||||||
| Margins and Expenses as a Percentage of Net Sales: | ||||||||||||||||||||||||||
| Gross profit rate | 45.2 | % | 40.5 | % | 475 | bp | ||||||||||||||||||||
| Sales and marketing expenses | 22.6 | % | 16.2 | % | 638 | bp | ||||||||||||||||||||
| Net credit expense | 4.4 | % | 4.5 | % | (9 | ) | bp | |||||||||||||||||||
| Contribution margin (d) | $ | 134,294 | $ | 90,116 | 49.0 | % | ||||||||||||||||||||
| As a percentage of net sales | 18.2 | % | 19.7 | % | (154 | ) | bp | |||||||||||||||||||
| Adjusted general and administrative expenses (d) | $ | 59,136 | $ | 33,900 | 74.4 | % | ||||||||||||||||||||
| As a percentage of net sales | 8.0 | % | 7.4 | % | 59 | bp | ||||||||||||||||||||
| Adjusted EBITDA (d) | $ | 76,391 | $ | 56,637 | 34.9 | % | ||||||||||||||||||||
| As a percentage of net sales | 10.4 | % | 12.4 | % | (205 | ) | bp | |||||||||||||||||||
| Selected Financial Data: | ||||||||||||||||||||||||||
| Liquidity (e) | $ | 117,875 | $ | 102,344 | 15.2 | % | ||||||||||||||||||||
| Free Cash Flow (d) | $ | 69,710 | $ | 54,088 | 28.9 | % | ||||||||||||||||||||
| Leverage ratio (f) | 3.3 | 2.3 | 100 | bp | ||||||||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||||||||
| Fingerhut and Gettington revolving new customer credit | ||||||||||||||||||||||||||
| accounts (g) | 266 | 288 | (7.6 | %) | ||||||||||||||||||||||
| Fingerhut FreshStart new customer credit accounts (g) | 93 | 123 | (24.4 | %) | ||||||||||||||||||||||
| PayCheck Direct new customer credit accounts (g) | 25 | 11 | 135.4 | % | ||||||||||||||||||||||
| Orchard Portfolio new gross customers (h) | 433 | n/a | n/m | |||||||||||||||||||||||
| Fingerhut and Gettington revolving active accounts (i) | 1,683 | 1,593 | 5.6 | % | ||||||||||||||||||||||
| Orchard Portfolio active customers (j) | 7,845 | n/a | n/m | |||||||||||||||||||||||
| PayCheck Direct eligible client employees (k) | 6,323 | 2,348 | 169.3 | % | ||||||||||||||||||||||
(a) Changes in rates are presented as the basis point (bp) increase (decrease) from the prior period.
(b) Consists of amortization expense of customer relationship finite-lived intangible assets, depreciation expense of software and impairment of indefinite-lived intangible assets. Depreciation expense related to equipment in Bluestem's fulfillment facilities are included in cost of goods sold.
(c) Interest expense net of interest income.
(d) Please refer to the "Bluestem Brands, Inc. - Non-GAAP Financial Measures" within this release for a reconciliation of non-GAAP financial measures to GAAP and why Bluestem believes these are important measures of its performance.
(e) Defined as unrestricted cash and cash equivalents plus availability on inventory line of credit.
(f) Leverage ratio as defined by our Successor term loan agreement dated November 7, 2014.
(g) Customers that have made their initial order on account during the fiscal period presented. Revolving new customer credit accounts excludes FreshStart graduates initially included in FreshStart new customer credit accounts when their initial order was made.
(h) Customers who have made a first time purchase from a particular brand within the Orchard Portfolio during the period presented.
(i) Revolving credit customers that have made at least one purchase on account within the previous twelve fiscal months and at least one payment on account since origination.
(j) Customers that have made at least one purchase within the previous twelve fiscal months.
(k) PayCheck Direct clients' full-time active employees with a tenure greater than six months, are at least 18 years old, and have met certain minimum annual earnings.
|
BLUESTEM BRANDS, INC. Consolidated Statements of Operations and Selected Operating Data (unaudited — in thousands) |
||||||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
Change (b) |
|
|||||||||||||||||||||
|
(52 Weeks Ended) |
||||||||||||||||||||||||||
| Net sales | $ | 1,720,189 | $ | 1,071,523 | $ | 432,392 | $ | 639,131 | 60.5 | % | ||||||||||||||||
| Cost of goods sold | 937,841 | 627,648 | 256,885 | 370,763 | 49.4 | % | ||||||||||||||||||||
| Gross profit | 782,348 | 443,875 | 175,507 | 268,368 | 76.3 | % | ||||||||||||||||||||
| Sales and marketing expenses | 412,234 | 196,795 | 69,128 | 127,667 | 109.5 | % | ||||||||||||||||||||
| Net credit expense | 64,035 | 16,958 | 18,011 | (1,053 | ) | 277.6 | % | |||||||||||||||||||
| General and administrative expenses | 200,276 | 166,267 | 34,466 | 131,801 | 20.5 | % | ||||||||||||||||||||
| Amortization and depreciation not included in | ||||||||||||||||||||||||||
| cost of goods sold (c) | 98,383 | 31,312 | 21,573 | 9,739 | 214.2 | % | ||||||||||||||||||||
| Loss on early extinguishment of debt | - | 9,298 | - | 9,298 | n/m | |||||||||||||||||||||
| Interest expense, net (d) | 43,920 | 20,667 | 7,091 | 13,576 | 112.5 | % | ||||||||||||||||||||
| (Loss) income before income taxes | (36,500 | ) | 2,578 | 25,238 | (22,660 | ) | (1515.8 | )% | ||||||||||||||||||
| Income tax (benefit) expense | (10,191 | ) | 1,560 | 9,222 | (7,662 | ) | (753.3 | )% | ||||||||||||||||||
| Net (loss) income | $ | (26,309 | ) | $ | 1,018 | $ | 16,016 | $ | (14,998 | ) | (2684.4 | )% | ||||||||||||||
| Margins and Expenses as a Percentage of Net Sales: | ||||||||||||||||||||||||||
| Gross profit rate | 45.5 | % | 41.4 | % | 406 | bp | ||||||||||||||||||||
| Sales and marketing expenses | 24.0 | % | 18.4 | % | 560 | bp | ||||||||||||||||||||
| Net credit expense | 3.7 | % | 1.6 | % | 214 | bp | ||||||||||||||||||||
| Contribution margin (e) | $ | 306,079 | $ | 230,122 | 33.0 | % | ||||||||||||||||||||
| As a percentage of net sales | 17.8 | % | 21.5 | % | (368 | ) | bp | |||||||||||||||||||
| Adjusted general and administrative expenses (e) | $ | 178,702 | $ | 112,474 | 58.9 | % | ||||||||||||||||||||
| As a percentage of net sales | 10.4 | % | 10.5 | % | (11 | ) | bp | |||||||||||||||||||
| Adjusted EBITDA (e) | $ | 130,825 | $ | 119,896 | 9.1 | % | ||||||||||||||||||||
| As a percentage of net sales | 7.6 | % | 11.2 | % | (358 | ) | bp | |||||||||||||||||||
| Free Cash Flow (e) | $ | 112,568 | $ | 113,017 | (0.4 | %) | ||||||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||||||||
| Fingerhut and Gettington revolving new customer credit | ||||||||||||||||||||||||||
| accounts (f) | 728 | 731 | (0.4 | %) | ||||||||||||||||||||||
| Fingerhut FreshStart new customer credit accounts (f) | 258 | 270 | (4.6 | %) | ||||||||||||||||||||||
| PayCheck Direct new customer credit accounts (f) | 51 | 26 | 95.3 | % | ||||||||||||||||||||||
| Orchard Portfolio new gross customers (g) | 973 | n/a | n/m | |||||||||||||||||||||||
| Fingerhut and Gettington revolving active accounts (h) | 1,683 | 1,593 | 5.7 | % | ||||||||||||||||||||||
| Orchard Portfolio active customers (i) | 7,845 | n/a | n/m | |||||||||||||||||||||||
| PayCheck Direct eligible client employees (j) | 6,323 | 2,348 | 169.3 | % | ||||||||||||||||||||||
(a) Orchard Portfolio results are presented for the period from July 10, 2015 through January 29, 2016.
(b) Changes in rates are presented as the basis point (bp) increase (decrease) from the prior period.
(c) Consists of amortization expense of customer relationship finite-lived intangible assets, depreciation expense of software and impairment of indefinite-lived intangibles. Depreciation expense related to equipment in Bluestem's fulfillment facilities are included in cost of goods sold.
(d) Interest expense net of interest income.
(e) Please refer to the "Bluestem Brands, Inc. - Non-GAAP Financial Measures" within this release for a reconciliation of non-GAAP financial measures to GAAP and why Bluestem believes these are important measures of its performance.
(f) Customers that have made their initial order on account during the fiscal period presented. Revolving new customer credit accounts excludes FreshStart graduates initially included in FreshStart new customer credit accounts when their initial order was made.
(g) Customers who have made a first time purchase from a particular brand within the Orchard Portfolio during the period presented.
(h) Revolving credit customers that have made at least one purchase on account within the previous twelve fiscal months and at least one payment on account since origination.
(i) Customers that have made at least one purchase within the previous twelve fiscal months.
(j) PayCheck Direct clients' full-time active employees with a tenure greater than six months, are at least 18 years old, and have met certain minimum annual earnings.
|
BLUESTEM BRANDS, INC. |
||||||||||
| January 29, 2016 | January 30, 2015 | |||||||||
| (unaudited) | ||||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 11,870 | $ | 59,222 | ||||||
| Restricted cash | 22,485 | 13,425 | ||||||||
| Customer accounts receivable, net of allowance for doubtful | ||||||||||
| accounts of $14,434 and $10,457, respectively | 44,446 | 36,494 | ||||||||
| Merchandise inventories | 263,579 | 96,431 | ||||||||
| Promotional material inventories | 53,253 | 13,976 | ||||||||
| Prepaid expenses and other assets | 32,647 | 23,465 | ||||||||
| Total current assets | 428,280 | 243,013 | ||||||||
| Property and equipment, net | 125,001 | 49,755 | ||||||||
| Intangible assets, net | 460,551 | 377,892 | ||||||||
| Goodwill | 367,481 | 201,642 | ||||||||
| Other assets | 3,405 | 97 | ||||||||
| Total Assets | $ | 1,384,718 | $ | 872,399 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 180,601 | $ | 82,037 | ||||||
| Current income taxes payable | 34,583 | 18,567 | ||||||||
| Accrued costs and other liabilities | 111,613 | 65,109 | ||||||||
| Short-term debt | 47,981 | 17,787 | ||||||||
| Total current liabilities | 374,778 | 183,500 | ||||||||
| Long-term debt | 490,032 | 272,889 | ||||||||
| Deferred income taxes | 154,428 | 125,205 | ||||||||
| Other long-term liabilities | 6,171 | 5,187 | ||||||||
| Total liabilities | 1,025,409 | 586,781 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | - | - | ||||||||
| Additional paid-in capital | 369,602 | 269,602 | ||||||||
| Retained earnings | (10,293 | ) | 16,016 | |||||||
| Total stockholders' equity | 359,309 | 285,618 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,384,718 | $ | 872,399 | ||||||
|
BLUESTEM BRANDS, INC. Condensed Consolidated Statement of Cash Flows (unaudited — in thousands) |
||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
|||||||||||||||||||
|
(13 Weeks Ended) |
||||||||||||||||||||||
| Operating Activities of Continuing Operations | ||||||||||||||||||||||
| Net (loss) income | $ | (6,813 | ) | $ | (8,604 | ) | $ | 16,016 | $ | (24,620 | ) | |||||||||||
| Adjustments to reconcile net (loss) income to net cash | ||||||||||||||||||||||
| provided by (used in) operating activities: | ||||||||||||||||||||||
| Amortization and depreciation expense | 54,266 | 22,145 | 21,831 | 314 | ||||||||||||||||||
| Noncash component of loss on early extinguishment of debt | - | 9,298 | - | 9,298 | ||||||||||||||||||
| Provision for doubtful accounts | 20,409 | 12,494 | 10,510 | 1,984 | ||||||||||||||||||
| Provision for merchandise returns | 35,743 | 14,371 | 11,455 | 2,916 | ||||||||||||||||||
| Deferred income taxes | (18,691 | ) | (256 | ) | (4,077 | ) | 3,821 | |||||||||||||||
| Stock-based compensation expense | 1,108 | 26,937 | 836 | 26,101 | ||||||||||||||||||
| Inventory obsolescence and other reserves | 17,343 | 14,428 | 11,285 | 3,143 | ||||||||||||||||||
| Other, net | 1,513 | 1,286 | 899 | 387 | ||||||||||||||||||
| Net change in assets and liabilities which provided (used) cash: | ||||||||||||||||||||||
| Customer accounts receivable | (65,286 | ) | (52,503 | ) | (43,072 | ) | (9,431 | ) | ||||||||||||||
| Merchandise inventories | 75,693 | 65,547 | 78,895 | (13,348 | ) | |||||||||||||||||
| Promotional material inventories | 32,628 | 18,125 | 22,066 | (3,941 | ) | |||||||||||||||||
| Prepaid expenses and other assets | 135 | (3,801 | ) | (2,984 | ) | (817 | ) | |||||||||||||||
| Current income taxes payable | 29,621 | (2,594 | ) | 18,567 | (21,161 | ) | ||||||||||||||||
| Accounts payable and other liabilities | (104,269 | ) | (31,469 | ) | (50,858 | ) | 19,389 | |||||||||||||||
| Net cash provided by (used in) operating activities | 73,400 | 85,404 | 91,369 | (5,965 | ) | |||||||||||||||||
| Investing Activities of Continuing Operations | ||||||||||||||||||||||
| Purchase of customer accounts receivable | (480,238 | ) | (451,133 | ) | (430,600 | ) | (20,533 | ) | ||||||||||||||
| Proceeds from sale of customer accounts receivable | 480,496 | 451,507 | 430,949 | 20,558 | ||||||||||||||||||
| Acquisition, net | 6,261 | (550,712 | ) | (550,712 | ) | - | ||||||||||||||||
| Net purchase of property and equipment | (11,343 | ) | (5,673 | ) | (5,351 | ) | (322 | ) | ||||||||||||||
| Net (decrease) increase in restricted cash | (4,521 | ) | (340 | ) | 736 | (1,076 | ) | |||||||||||||||
| Net cash used in investing activities | (9,345 | ) | (556,351 | ) | (554,978 | ) | (1,373 | ) | ||||||||||||||
| Financing Activities of Continuing Operations | ||||||||||||||||||||||
| Borrowings of debt | - | 281,064 | 281,064 | - | ||||||||||||||||||
| Repayments of debt | (7,648 | ) | - | - | - | |||||||||||||||||
| Repayments on Predecessor term loan | - | (185,000 | ) | - | (185,000 | ) | ||||||||||||||||
| Borrowings on asset backed line of credit | 111,667 | 181,907 | 180,287 | 1,620 | ||||||||||||||||||
| Repayments on asset backed line of credit | (172,105 | ) | (184,607 | ) | (182,676 | ) | (1,931 | ) | ||||||||||||||
| Settlement of selling shareholders' acquisition liabilities | - | 120,228 | (66,361 | ) | 186,589 | |||||||||||||||||
| Equity contributions from parent | - | 269,602 | 269,602 | - | ||||||||||||||||||
| Other | - | 1,479 | - | 1,479 | ||||||||||||||||||
| Net cash (used in) provided by financing activities | (68,086 | ) | 484,673 | 481,916 | 2,757 | |||||||||||||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | (4,031 | ) | 13,726 | 18,307 | (4,581 | ) | ||||||||||||||||
| Cash and Cash Equivalents, Beginning of Period | 15,901 | 45,496 | 40,915 | 45,496 | ||||||||||||||||||
| Cash and Cash Equivalents, End of Period | $ | 11,870 | $ | 59,222 | $ | 59,222 | $ | 40,915 | ||||||||||||||
|
BLUESTEM BRANDS, INC. Condensed Consolidated Statement of Cash Flows (unaudited — in thousands) |
||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
|||||||||||||||||||
|
(52 Weeks Ended) |
||||||||||||||||||||||
| Operating Activities of Continuing Operations | ||||||||||||||||||||||
| Net (loss) income | $ | (26,309 | ) | $ | 1,018 | $ | 16,016 | $ | (14,998 | ) | ||||||||||||
| Adjustments to reconcile net (loss) income to net cash | ||||||||||||||||||||||
| provided by (used in) operating activities: | ||||||||||||||||||||||
| Amortization and depreciation expense | 101,327 | 33,091 | 21,831 | 11,260 | ||||||||||||||||||
| Noncash component of loss on early extinguishment of debt | - | 9,298 | - | 9,298 | ||||||||||||||||||
| Provision for doubtful accounts | 31,204 | 4,552 | 10,510 | (5,958 | ) | |||||||||||||||||
| Provision for merchandise returns | 83,824 | 30,186 | 11,455 | 18,731 | ||||||||||||||||||
| Deferred income taxes | (28,346 | ) | (5,413 | ) | (4,077 | ) | (1,336 | ) | ||||||||||||||
| Stock-based compensation expense | 4,106 | 29,068 | 836 | 28,232 | ||||||||||||||||||
| Excess tax benefit from stock-based compensation | - | (5,159 | ) | - | (5,159 | ) | ||||||||||||||||
| Inventory obsolescence and other reserves | 45,701 | 31,897 | 11,285 | 20,612 | ||||||||||||||||||
| Other, net | 5,129 | 2,738 | 899 | 1,839 | ||||||||||||||||||
| Net change in assets and liabilities: | ||||||||||||||||||||||
| Customer account receivables, net | (122,049 | ) | (72,920 | ) | (43,072 | ) | (29,848 | ) | ||||||||||||||
| Merchandise inventories | (6,695 | ) | (21,012 | ) | 78,895 | (99,907 | ) | |||||||||||||||
| Promotional material inventories | (8,693 | ) | 1,386 | 22,066 | (20,680 | ) | ||||||||||||||||
| Prepaid expenses and other assets | (439 | ) | (3,342 | ) | (2,984 | ) | (358 | ) | ||||||||||||||
| Current income taxes payable | 16,016 | (5,817 | ) | 18,567 | (24,384 | ) | ||||||||||||||||
| Accounts payable and other liabilities | (60,680 | ) | 30,991 | (50,858 | ) | 81,849 | ||||||||||||||||
| Net cash provided by (used in) operating activities | 34,096 | 60,562 | 91,369 | (30,807 | ) | |||||||||||||||||
| Investing Activities of Continuing Operations | ||||||||||||||||||||||
| Purchase of customer accounts receivable | (1,197,537 | ) | (1,091,962 | ) | (430,600 | ) | (661,362 | ) | ||||||||||||||
| Proceeds from sale of customer accounts receivable | 1,198,146 | 1,093,603 | 430,949 | 662,654 | ||||||||||||||||||
| Acquisitions, net | (375,313 | ) | (550,712 | ) | (550,712 | ) | - | |||||||||||||||
| Net purchases of property and equipment | (35,935 | ) | (24,220 | ) | (5,351 | ) | (18,869 | ) | ||||||||||||||
| Net increase in restricted cash | (9,060 | ) | (6,353 | ) | 736 | (7,089 | ) | |||||||||||||||
| Net cash used in investing activities | (419,699 | ) | (579,644 | ) | (554,978 | ) | (24,666 | ) | ||||||||||||||
| Financing Activities of Continuing Operations | ||||||||||||||||||||||
| Borrowings of debt | 269,246 | 281,064 | 281,064 | - | ||||||||||||||||||
| Repayments of debt | (43,282 | ) | - | - | - | |||||||||||||||||
| Repayment on Predecessor term loan | - | (225,000 | ) | - | (225,000 | ) | ||||||||||||||||
| Borrowings on asset backed line of credit | 481,712 | 516,462 | 180,287 | 336,175 | ||||||||||||||||||
| Repayments on asset backed line of credit | (469,425 | ) | (518,485 | ) | (182,676 | ) | (335,809 | ) | ||||||||||||||
| Settlement of selling shareholders' acquisition liabilities | - | 120,228 | (66,361 | ) | 186,589 | |||||||||||||||||
| Cash equity contributions from parent | 100,000 | 269,602 | 269,602 | - | ||||||||||||||||||
| Other financing activities, net | - | 2,045 | - | 2,045 | ||||||||||||||||||
| Net cash provided by (used in) financing activities | 338,251 | 445,916 | 481,916 | (36,000 | ) | |||||||||||||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | (47,352 | ) | (73,166 | ) | 18,307 | (91,473 | ) | |||||||||||||||
| Cash and Cash Equivalents, Beginning of Period | 59,222 | 132,388 | 40,915 | 132,388 | ||||||||||||||||||
| Cash and Cash Equivalents, End of Period | $ | 11,870 | $ | 59,222 | $ | 59,222 | $ | 40,915 | ||||||||||||||
|
BLUESTEM BRANDS, INC. Supplemental Financial Information (unaudited — in thousands, except average order size) |
|||||||||||||||||||||||||||||||||
|
Successor |
Predecessor and Successor Total |
Successor |
Predecessor |
Change |
|||||||||||||||||||||||||||||
|
(13 Weeks Ended) |
|||||||||||||||||||||||||||||||||
| Total sales by merchandise category: | |||||||||||||||||||||||||||||||||
| Home | $ | 190,164 | 24.2 | % | $ | 154,188 | 32.2 | % | $ | 145,334 | $ | 8,854 | 23.3 | % | |||||||||||||||||||
| Entertainment | 248,359 | 31.6 | % | 237,214 | 49.6 | % | 225,163 | 12,051 | 4.7 | % | |||||||||||||||||||||||
| Fashion | 346,440 | 44.1 | % | 87,303 | 18.2 | % | 82,957 | 4,346 | 296.8 | % | |||||||||||||||||||||||
|
Total merchandise sales (a) |
784,963 | 100.0 | % | 478,705 | 100.0 | % | 453,454 | 25,251 | 64.0 | % | |||||||||||||||||||||||
| Returns and allowances | (69,043 | ) | (28,804 | ) | (27,218 | ) | (1,586 | ) | 139.7 | % | |||||||||||||||||||||||
| Commissions and other revenue | 21,762 | 6,573 | 6,156 | 417 | 231.1 | % | |||||||||||||||||||||||||||
| Net sales | $ | 737,682 | $ | 456,474 | $ | 432,392 | $ | 24,082 | 61.6 | % | |||||||||||||||||||||||
| Gross profit rate | 45.2 | % | 40.5 | % | 473 | bp | |||||||||||||||||||||||||||
| Sales and marketing expense | 22.6 | % | 16.2 | % | 640 | bp | |||||||||||||||||||||||||||
| Contribution margin rate (b) | 18.2 | % | 19.7 | % | (151 | ) | bp | ||||||||||||||||||||||||||
| Average order size (c) | $ | 141 | $ | 232 | (39.2 | )% | |||||||||||||||||||||||||||
| Fingerhut sales by merchandise category: | |||||||||||||||||||||||||||||||||
| Home | $ | 145,036 | 33.3 | % | $ | 139,032 | 32.8 | % | $ | 131,050 | $ | 7,982 | 4.3 | % | |||||||||||||||||||
| Entertainment | 208,657 | 47.7 | % | 205,304 | 48.5 | % | 194,955 | 10,349 | 1.6 | % | |||||||||||||||||||||||
| Fashion | 83,532 | 19.1 | % | 79,320 | 18.7 | % | 75,333 | 3,987 | 5.3 | % | |||||||||||||||||||||||
| Total merchandise sales (a) | 437,225 | 100.0 | % | 423,656 | 100.0 | % | 401,338 | 22,318 | 3.2 | % | |||||||||||||||||||||||
| Returns and allowances | (27,080 | ) | (25,777 | ) | (24,366 | ) | (1,411 | ) | 5.1 | % | |||||||||||||||||||||||
| Commissions | 6,828 | 5,995 | 5,612 | 383 | 13.9 | % | |||||||||||||||||||||||||||
| Net sales | $ | 416,973 | $ | 403,874 | $ | 382,584 | $ | 21,290 | 3.2 | % | |||||||||||||||||||||||
| Gross profit rate | 43.3 | % | 42.8 | % | 50 | bp | |||||||||||||||||||||||||||
| Sales and marketing expense | 15.8 | % | 16.6 | % | (81 | ) | bp | ||||||||||||||||||||||||||
| Contribution margin rate (b) | 20.6 | % | 21.3 | % | (72 | ) | bp | ||||||||||||||||||||||||||
| Average order size (c) | $ | 245 | $ | 230 | 6.6 | % | |||||||||||||||||||||||||||
| Orchard sales by merchandise category: | |||||||||||||||||||||||||||||||||
| Home | $ | 25,233 | 9.1 | % | |||||||||||||||||||||||||||||
| Fashion | 251,933 | 90.9 | % | ||||||||||||||||||||||||||||||
| Total merchandise sales (a) | 277,166 | 100.0 | % | ||||||||||||||||||||||||||||||
| Returns and allowances | (37,831 | ) | |||||||||||||||||||||||||||||||
| Commissions and other revenue | 13,917 | ||||||||||||||||||||||||||||||||
| Net sales | $ | 253,252 | |||||||||||||||||||||||||||||||
| Gross profit rate | 53.0 | % | |||||||||||||||||||||||||||||||
| Sales and marketing expense | 36.6 | % | |||||||||||||||||||||||||||||||
| Contribution margin rate (b) | 16.3 | % | |||||||||||||||||||||||||||||||
| Average order size (c) | $ | 78 | |||||||||||||||||||||||||||||||
| Other sales by merchandise category: (d) | |||||||||||||||||||||||||||||||||
| Home | $ | 19,895 | 28.2 | % | $ | 15,156 | 27.5 | % | $ | 14,284 | $ | 872 | 31.3 | % | |||||||||||||||||||
| Entertainment | 39,702 | 56.3 | % | 31,910 | 58.0 | % | 30,208 | 1,702 | 24.4 | % | |||||||||||||||||||||||
| Fashion | 10,975 | 15.6 | % | 7,983 | 14.5 | % | 7,624 | 359 | 37.5 | % | |||||||||||||||||||||||
| Total merchandise sales (a) | 70,572 | 100.0 | % | 55,049 | 100.0 | % | 52,116 | 2,933 | 28.2 | % | |||||||||||||||||||||||
| Returns and allowances | (4,132 | ) | (3,027 | ) | (2,852 | ) | (175 | ) | 36.5 | % | |||||||||||||||||||||||
| Commissions | 1,017 | 578 | 544 | 34 | 76.0 | % | |||||||||||||||||||||||||||
| Net sales | $ | 67,457 | $ | 52,600 | $ | 49,808 | $ | 2,792 | 28.2 | % | |||||||||||||||||||||||
| Gross profit rate | 28.0 | % | 22.7 | % | 528 | bp | |||||||||||||||||||||||||||
| Sales and marketing expense | 12.1 | % | 13.1 | % | (100 | ) | bp | ||||||||||||||||||||||||||
| Contribution margin rate (b) | 10.1 | % | 7.6 | % | 250 | bp | |||||||||||||||||||||||||||
| Average order size (c) | $ | 299 | $ | 252 | 18.6 | % | |||||||||||||||||||||||||||
(a) Total merchandise sales includes shipping and handling revenue and is net of sales discounts.
(b) Represents contribution margin as a percentage of net sales. Please refer to the "Bluestem Brands, Inc. - Non-GAAP Financial Measures" within this release for a reconciliation of non-GAAP financial measures to GAAP and why Bluestem believes these are important measures of its performance.
(c) Represents retail merchandise sales including shipping and handling revenue divided by the number of merchandise orders fulfilled during the fiscal period presented.
(d) Other includes Gettington and Paycheck Direct.
|
BLUESTEM BRANDS, INC. |
||||||||||||||||||||||||||||||||
|
Successor |
Predecessor and Successor Total |
Successor |
Predecessor |
|||||||||||||||||||||||||||||
|
(52 Weeks Ended) |
||||||||||||||||||||||||||||||||
|
Change |
||||||||||||||||||||||||||||||||
| Total sales by merchandise category: (a) | ||||||||||||||||||||||||||||||||
| Home | $ | 553,754 | 30.3 | % | $ | 439,518 | 39.2 | % | $ | 145,334 | $ | 294,184 | 26.0 | % | ||||||||||||||||||
| Entertainment | 537,509 | 29.4 | % | 497,299 | 44.3 | % | 225,163 | 272,136 | 8.1 | % | ||||||||||||||||||||||
| Fashion | 739,106 | 40.4 | % | 185,347 | 16.5 | % | 82,957 | 102,390 | 298.8 | % | ||||||||||||||||||||||
| Total merchandise sales (b) | 1,830,369 | 100.0 | % | 1,122,164 | 100.0 | % | 453,454 | 668,710 | 63.1 | % | ||||||||||||||||||||||
| Returns and allowances | (163,233 | ) | (69,903 | ) | (27,218 | ) | (42,685 | ) | 133.5 | % | ||||||||||||||||||||||
| Commissions and other revenue | 53,053 | 19,262 | 6,156 | 13,106 | 175.4 | % | ||||||||||||||||||||||||||
| Net sales | $ | 1,720,189 | $ | 1,071,523 | $ | 432,392 | $ | 639,131 | 60.5 | % | ||||||||||||||||||||||
| Gross profit rate | 45.5 | % | 41.4 | % | 410 | bp | ||||||||||||||||||||||||||
| Sales and marketing expense | 24.0 | % | 18.4 | % | 560 | bp | ||||||||||||||||||||||||||
| Contribution margin rate (c) | 17.8 | % | 21.5 | % | (370 | ) | bp | |||||||||||||||||||||||||
| Average order size (d) | $ | 140 | $ | 228 | (38.4 | )% | ||||||||||||||||||||||||||
| Fingerhut sales by merchandise category: | ||||||||||||||||||||||||||||||||
| Home | $ | 441,940 | 40.7 | % | $ | 398,473 | 39.7 | % | $ | 131,050 | $ | 267,423 | 10.9 | % | ||||||||||||||||||
| Entertainment | 456,840 | 42.1 | % | 433,316 | 43.2 | % | 194,955 | 238,361 | 5.4 | % | ||||||||||||||||||||||
| Fashion | 187,024 | 17.2 | % | 170,910 | 17.1 | % | 75,333 | 95,577 | 9.4 | % | ||||||||||||||||||||||
| Total merchandise sales (b) | 1,085,804 | 100.0 | % | 1,002,699 | 100.0 | % | 401,338 | 601,361 | 8.3 | % | ||||||||||||||||||||||
| Returns and allowances | (72,461 | ) | (62,960 | ) | (24,366 | ) | (38,594 | ) | 15.1 | % | ||||||||||||||||||||||
| Commissions | 19,738 | 17,954 | 5,612 | 12,342 | 9.9 | % | ||||||||||||||||||||||||||
| Net sales | $ | 1,033,081 | $ | 957,693 | $ | 382,584 | $ | 575,109 | 7.9 | % | ||||||||||||||||||||||
| Gross profit rate | 43.4 | % | 43.6 | % | (20 | ) | bp | |||||||||||||||||||||||||
| Sales and marketing expense | 18.4 | % | 18.8 | % | (40 | ) | bp | |||||||||||||||||||||||||
| Contribution margin rate (c) | 19.7 | % | 23.2 | % | (350 | ) | bp | |||||||||||||||||||||||||
| Average order size (d) | $ | 235 | $ | 226 | 4.0 | % | ||||||||||||||||||||||||||
| Orchard sales by merchandise category: (a) | ||||||||||||||||||||||||||||||||
| Home | $ | 54,750 | 9.3 | % | ||||||||||||||||||||||||||||
| Fashion | 531,033 | 90.7 | % | |||||||||||||||||||||||||||||
| Total merchandise sales (b) | 585,783 | 100.0 | % | |||||||||||||||||||||||||||||
| Returns and allowances | (80,866 | ) | ||||||||||||||||||||||||||||||
| Commissions and other revenue | 31,028 | |||||||||||||||||||||||||||||||
| Net sales | $ | 535,945 | ||||||||||||||||||||||||||||||
| Gross profit rate | 54.6 | % | ||||||||||||||||||||||||||||||
| Sales and marketing expense | 37.2 | % | ||||||||||||||||||||||||||||||
| Contribution margin rate (c) | 17.4 | % | ||||||||||||||||||||||||||||||
| Average order size (d) | $ | 75 | ||||||||||||||||||||||||||||||
| Other sales by merchandise category: (e) | ||||||||||||||||||||||||||||||||
| Home | $ | 57,064 | 35.9 | % | $ | 41,045 | 34.4 | % | $ | 14,284 | $ | 26,761 | 39.0 | % | ||||||||||||||||||
| Entertainment | 80,669 | 50.8 | % | 63,983 | 53.5 | % | 30,208 | 33,775 | 26.1 | % | ||||||||||||||||||||||
| Fashion | 21,049 | 13.3 | % | 14,437 | 12.1 | % | 7,624 | 6,813 | 45.8 | % | ||||||||||||||||||||||
| Total merchandise sales (b) | 158,782 | 100.0 | % | 119,465 | 100.0 | % | 52,116 | 67,349 | 32.9 | % | ||||||||||||||||||||||
| Returns and allowances | (9,906 | ) | (6,943 | ) | (2,852 | ) | (4,091 | ) | 42.7 | % | ||||||||||||||||||||||
| Commissions | 2,287 | 1,308 | 544 | 764 | 74.8 | % | ||||||||||||||||||||||||||
| Net sales | $ | 151,163 | $ | 113,830 | $ | 49,808 | $ | 64,022 | 32.8 | % | ||||||||||||||||||||||
| Gross profit rate | 27.0 | % | 23.0 | % | 400 | bp | ||||||||||||||||||||||||||
| Sales and marketing expense | 15.2 | % | 14.8 | % | 40 | bp | ||||||||||||||||||||||||||
| Contribution margin rate (c) | 6.2 | % | 6.8 | % | (60 | ) | bp | |||||||||||||||||||||||||
| Average order size (d) | $ | 278 | $ | 251 | 10.6 | % | ||||||||||||||||||||||||||
(a) Orchard Portfolio results are presented for the period from July 10, 2015 through January 29, 2016.
(b) Total merchandise sales includes shipping and handling revenue and is net of sales discounts.
(c) Represents contribution margin as a percentage of net sales. Please refer to the "Bluestem Brands, Inc. - Non-GAAP Financial Measures" within this release for a reconciliation of non-GAAP financial measures to GAAP and why Bluestem believes these are important measures of its performance.
(d) Represents retail merchandise sales including shipping and handling revenue divided by the number of merchandise orders fulfilled during the fiscal period presented.
(e) Other includes Gettington and Paycheck Direct.
|
BLUESTEM BRANDS, INC. Supplemental Financial Information (unaudited — in thousands, except average balance outstanding) |
||||||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
Change | ||||||||||||||||||||||
|
(13 Weeks Ended) |
||||||||||||||||||||||||||
| Net credit expense: | ||||||||||||||||||||||||||
| Finance charge and fee income | $ | (1,400 | ) | $ | (3,376 | ) | $ | (3,436 | ) | $ | 60 | (58.5 | )% | |||||||||||||
| Provision for doubtful accounts (a) | 20,409 | 12,494 | 10,510 | 1,984 | 63.3 | % | ||||||||||||||||||||
| Credit management costs | 21,664 | 20,556 | 19,038 | 1,518 | 5.4 | % | ||||||||||||||||||||
| Portfolio profit sharing and servicing fee income | (7,889 | ) | (8,961 | ) | (8,101 | ) | (860 | ) | (12.0 | )% | ||||||||||||||||
| Net credit expense | $ | 32,784 | $ | 20,713 | $ | 18,011 | $ | 2,702 | 58.3 | % | ||||||||||||||||
| Serviced Portfolio Selected Credit Data: | ||||||||||||||||||||||||||
| (13 Weeks Ended) | ||||||||||||||||||||||||||
| January 29, 2016 | ||||||||||||||||||||||||||
| Revolving (b) | FreshStart (c) | PCD Installment (d) | ||||||||||||||||||||||||
| Balance active accounts | 1,984 | 159 | 56 | |||||||||||||||||||||||
| Average balance outstanding | $ | 742 | $ | 118 | $ | 624 | ||||||||||||||||||||
| Customer accounts receivable | $ | 1,472,335 | $ | 18,754 | $ | 35,096 | ||||||||||||||||||||
| Balances 30+ days delinquent (f) | $ | 216,089 | $ | 4,684 | $ | 1,349 | ||||||||||||||||||||
| Balances 30+ days delinquent as a percentage | ||||||||||||||||||||||||||
| of total customer accounts receivable (g) | 14.7 | % | 25.0 | % | 3.8 | % | ||||||||||||||||||||
| Average customer accounts receivable | $ | 1,418,984 | $ | 16,287 | $ | 30,637 | ||||||||||||||||||||
| Finance charge and fee income | $ | 93,524 | $ | 1,285 | n/a | |||||||||||||||||||||
| Finance charge and fee income rate (h) | 26.4 | % | 14.3 | % | n/a | |||||||||||||||||||||
| Net principal charge-offs | $ | 63,196 | $ | 2,801 | $ | 1,084 | ||||||||||||||||||||
| Net principal charge-off rate (i) | 17.8 | % | 31.2 | % | 14.2 | % | ||||||||||||||||||||
| (13 Weeks Ended) | ||||||||||||||||||||||||||
| January 30, 2015 | ||||||||||||||||||||||||||
| Revolving (b) | FreshStart (c) | PCD Installment (d) | ||||||||||||||||||||||||
| Balance active accounts | 1,878 | 184 | 25 | |||||||||||||||||||||||
| Average balance outstanding | $ | 686 | $ | 127 | $ | 723 | ||||||||||||||||||||
| Customer accounts receivable (e) | $ | 1,287,526 | $ | 23,346 | $ | 17,921 | ||||||||||||||||||||
| Balances 30+ days delinquent (f) | $ | 189,092 | $ | 4,805 | $ | 1,109 | ||||||||||||||||||||
| Balances 30+ days delinquent as a percentage | ||||||||||||||||||||||||||
| of total customer accounts receivable (g) | 14.7 | % | 20.6 | % | 6.2 | % | ||||||||||||||||||||
| Average customer accounts receivable | $ | 1,220,616 | $ | 16,353 | $ | 15,053 | ||||||||||||||||||||
| Finance charge and fee income | $ | 87,673 | $ | 1,782 | n/a | |||||||||||||||||||||
| Finance charge and fee income rate (h) | 28.7 | % | 21.6 | % | n/a | |||||||||||||||||||||
| Net principal charge-offs | $ | 58,729 | $ | 2,431 | $ | 71 | ||||||||||||||||||||
| Net principal charge-off rate (i) | 19.2 | % | 29.5 | % | 1.9 | % | ||||||||||||||||||||
(a) The provision for doubtful accounts includes $12.1 million related to the merchant fee for the 13 weeks ended January 29, 2016
(b) Revolving serviced portfolio includes Fingerhut and Gettington.com revolving credit accounts.
(c) FreshStart serviced portfolio is Fingerhut's installment accounts.
(d) PCD installment serviced portfolio is installment receivables issued to consumers who are members and employees of participating organizations and employers in the PayCheck Direct program.
(e) Customer accounts receivable excludes impact from purchase accounting fair value adjustment.
(f) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end.
(g) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end as a percentage of total customer accounts receivable as of the customers' statement cycle dates prior to or on fiscal period end.
(h) Revolving finance charge and fee income rate represents finance charge and fee income as a percentage of average customer accounts receivable for the 13 weeks ended January 29, 2016 and January 30, 2015 annualized to 52-week periods for comparability. FreshStart finance charge and fee income rate represents finance charge and fee income as a percentage of the 13 weeks of FreshStart related sales five months prior to the 13 weeks ended January 29, 2016 and January 30, 2015.
(i) Revolving and PCD Installment net principal charge-off rate represents net principal charge-offs as a percentage of average customer accounts receivable for the 13 weeks ended January 29, 2016 and January 30, 2015 annualized to 52-week periods for comparability. FreshStart net principal charge-off rate represents net principal charge-offs as a percentage of the 13 weeks of FreshStart related sales five months prior to the 13 weeks ended January 29, 2016 and January 30, 2015.
|
BLUESTEM BRANDS, INC. Supplemental Financial Information (unaudited — in thousands, except average balance outstanding) |
||||||||||||||||||||||||||
|
Successor |
Predecessor |
Successor |
Predecessor |
Change | ||||||||||||||||||||||
|
(52 Weeks Ended) |
||||||||||||||||||||||||||
| Net credit expense (income): | ||||||||||||||||||||||||||
| Finance charge and fee income | $ | (6,048 | ) | $ | 4,411 | $ | (3,436 | ) | $ | 7,847 | (237.1 | )% | ||||||||||||||
| Provision for doubtful accounts (a) | 31,204 | 4,552 | 10,510 | (5,958 | ) | 585.5 | % | |||||||||||||||||||
| Credit management costs | 78,134 | 70,917 | 19,038 | 51,879 | 10.2 | % | ||||||||||||||||||||
| Portfolio profit sharing and servicing fee income | (39,254 | ) | (62,922 | ) | (8,101 | ) | (54,821 | ) | (37.6 | )% | ||||||||||||||||
| Net credit expense (income) | $ | 64,036 | $ | 16,958 | $ | 18,011 | $ | (1,053 | ) | 277.6 | % | |||||||||||||||
| Serviced Portfolio Selected Credit Data: | ||||||||||||||||||||||||||
| (52 Weeks Ended) | ||||||||||||||||||||||||||
| January 29, 2016 | ||||||||||||||||||||||||||
| Revolving (b) | FreshStart (c) | PCD Installment (d) | ||||||||||||||||||||||||
| Balance active accounts | 1,984 | 159 | 56 | |||||||||||||||||||||||
| Average balance outstanding | $ | 742 | $ | 118 | $ | 624 | ||||||||||||||||||||
| Customer accounts receivable | $ | 1,472,335 | $ | 18,754 | $ | 35,096 | ||||||||||||||||||||
| Balances 30+ days delinquent (f) | $ | 216,089 | $ | 4,684 | $ | 1,349 | ||||||||||||||||||||
| Balances 30+ days delinquent as a percentage | ||||||||||||||||||||||||||
| of total customer accounts receivable (g) | 14.7 | % | 25.0 | % | 3.8 | % | ||||||||||||||||||||
| Average customer accounts receivable | $ | 1,290,853 | $ | 17,187 | $ | 20,864 | ||||||||||||||||||||
| Finance charge and fee income (expense) | $ | 360,870 | $ | 3,038 | n/a | |||||||||||||||||||||
| Finance charge and fee income rate (h) | 28.0 | % | 6.1 | % | n/a | |||||||||||||||||||||
| Net principal charge-offs | $ | 235,735 | $ | 16,758 | $ | 2,962 | ||||||||||||||||||||
| Net principal charge-off rate (i) | 18.3 | % | 33.5 | % | 14.2 | % | ||||||||||||||||||||
| (52 Weeks Ended) | ||||||||||||||||||||||||||
| January 30, 2015 | ||||||||||||||||||||||||||
| Revolving (b) | FreshStart (c) | PCD Installment (d) | ||||||||||||||||||||||||
| Balance active accounts | 1,878 | 184 | 25 | |||||||||||||||||||||||
| Average balance outstanding | $ | 686 | $ | 127 | $ | 723 | ||||||||||||||||||||
| Customer accounts receivable (e) | $ | 1,287,526 | $ | 23,346 | $ | 17,921 | ||||||||||||||||||||
| Balances 30+ days delinquent (f) | $ | 189,092 | $ | 4,805 | $ | 1,109 | ||||||||||||||||||||
| Balances 30+ days delinquent as a percentage | ||||||||||||||||||||||||||
| of total customer accounts receivable (g) | 14.7 | % | 20.6 | % | 6.2 | % | ||||||||||||||||||||
| Average customer accounts receivable | $ | 1,077,369 | $ | 13,463 | $ | 8,243 | ||||||||||||||||||||
| Finance charge and fee income | $ | 314,662 | $ | 3,582 | n/a | |||||||||||||||||||||
| Finance charge and fee income rate (h) | 29.2 | % | 9.7 | % | n/a | |||||||||||||||||||||
| Net principal charge-offs | $ | 182,122 | $ | 11,979 | $ | 340 | ||||||||||||||||||||
| Net principal charge-off rate (i) | 16.9 | % | 32.5 | % | 4.1 | % | ||||||||||||||||||||
(a) The provision for doubtful accounts includes $12.1 million related to the merchant fee for the 52 weeks ended January 29, 2016
(b) Revolving serviced portfolio includes Fingerhut and Gettington.com revolving credit accounts.
(c) FreshStart serviced portfolio is Fingerhut's installment accounts.
(d) PCD installment serviced portfolio is installment receivables issued to consumers who are members and employees of participating organizations and employers in the PayCheck Direct program.
(e) Customer accounts receivable excludes impact from purchase accounting fair value adjustment.
(f) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end.
(g) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end as a percentage of total customer accounts receivable as of the customers' statement cycle dates prior to or on fiscal period end.
(h) Revolving finance charge and fee income rate represents finance charge and fee income as a percentage of average customer accounts receivable for the 52 weeks ended January 29, 2016 and January 30, 2015. FreshStart finance charge and fee income rate represents finance charge and fee income as a percentage of the 52 weeks of FreshStart related sales five months prior to the 52 weeks ended January 29, 2016 and January 30, 2015.
(i) Revolving and PCD Installment net principal charge-off rate represents net principal charge-offs as a percentage of average customer accounts receivable for the 52 weeks ended January 29, 2016 and January 30, 2015. FreshStart net principal charge-off rate represents net principal charge-offs as a percentage of the 52 weeks of FreshStart related sales five months prior to the 52 weeks ended January 29, 2016 and January 30, 2015.
BLUESTEM BRANDS, INC.
Non-GAAP Financial Measures
(unaudited — in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries which are presented in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, Bluestem uses the following measures that are not in accordance with, or an alternative to, measures prepared in accordance with GAAP (non-GAAP measures):
Contribution margin, as presented, is defined as net sales less cost of goods sold, sales and marketing expenses and net credit expense (income). Contribution Margin represents the combined performance of merchandising, marketing and credit management activities.
Adjusted general and administrative expenses, as presented, is defined as general and administrative expenses adjusted for stock-based compensation expense, dividend equivalent expense, acquisition transaction costs, integration costs, specified litigation matters, lease termination costs and other. Specified litigation matters are certain litigation contingencies that existed as of the November 7, 2014 acquisition of Bluestem by Bluestem Group that are subject to limited indemnification by Bluestem's former stockholders.
Adjusted EBITDA, as presented, represents net (loss) income before income tax (benefit) expense, interest expense, amortization and depreciation expense, stock-based compensation expense, dividend equivalent expense, acquisition transaction costs, integration costs, loss on early extinguishment of debt, specified litigation matters, lease termination costs and other. Specified litigation matters are certain litigation contingencies that existed as of the November 7, 2014 acquisition of Bluestem by Bluestem Group that are subject to limited indemnification by Bluestem's former stockholders.
Free cash flow, as presented, represents adjusted EBITDA, as defined above, less maintenance capital expenditures.
We provide these measures because we believe they are useful to investors in evaluating our operating performance compared to other companies in our industry. As non-GAAP measures, they have limitations in that they do not reflect all of the amounts associated with Bluestem's results of operations as determined in accordance with GAAP and are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP. In addition, our calculations of contribution margin, adjusted general and administrative expense, adjusted EBITDA, and free cash flow may not be comparable to the calculations of such measures by other companies.
The following table reconciles Contribution Margin from the nearest GAAP performance measure, which is net (loss) income:
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 (a) | January 30, 2015 | |||||||||||||||||
| Contribution Margin: | ||||||||||||||||||||
| Net (loss) income | $ | (6,813 | ) | $ | (8,604 | ) | $ | (26,309 | ) | $ | 1,018 | |||||||||
| Income tax expense (benefit) | 10,971 | (2,960 | ) | (10,191 | ) | 1,560 | ||||||||||||||
| Interest expense, net | 13,701 | 7,419 | 43,920 | 20,667 | ||||||||||||||||
| Loss on early extinguishment of debt | - | 9,298 | - | 9,298 | ||||||||||||||||
| Amortization and depreciation not included in cost of sales | 53,163 | 21,847 | 98,383 | 31,312 | ||||||||||||||||
| General and administrative expenses | 63,272 | 63,116 | 200,276 | 166,267 | ||||||||||||||||
| Contribution Margin | $ | 134,294 | $ | 90,116 | $ | 306,079 | $ | 230,122 | ||||||||||||
| Contribution margin % of net sales | 18.2 | % | 19.7 | % | 17.8 | % | 21.5 | % | ||||||||||||
| The following table reconciles Adjusted General and Administrative expenses from the nearest GAAP performance measure, which is general and administrative expenses: | ||||||||||||||||||||
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 (a) | January 30, 2015 | |||||||||||||||||
| Adjusted General and Administrative Expenses: | ||||||||||||||||||||
| General and administrative expenses | $ | 63,272 | $ | 63,116 | $ | 200,276 | $ | 166,267 | ||||||||||||
| Less: | ||||||||||||||||||||
| Stock-based compensation expense | 1,099 | 7,553 | 4,106 | 9,684 | ||||||||||||||||
| Dividend equivalent expense | - | 19,628 | - | 28,681 | ||||||||||||||||
| Acquisition transaction costs | - | 1,581 | 8,342 | 11,237 | ||||||||||||||||
| Integration costs | 2,635 | - | 5,607 | - | ||||||||||||||||
| Specified litigation matters | - | 54 | - | 3,595 | ||||||||||||||||
| Lease termination costs | - | - | 1,122 | - | ||||||||||||||||
| Other | 402 | 400 | 2,397 | 596 | ||||||||||||||||
| Adjusted General and Administrative Expenses | $ | 59,136 | $ | 33,900 | $ | 178,702 | $ | 112,474 | ||||||||||||
| Adjusted general and administrative expenses % of net sales | 8.0 | % | 7.4 | % | 10.4 | % | 10.5 | % | ||||||||||||
(a) Orchard Portfolio results are presented for the period from July 10, 2015 through January 29, 2016.
|
BLUESTEM BRANDS, INC. Non-GAAP Financial Measures (unaudited — in thousands) |
||||||||||||||||||||
| The following table reconciles Adjusted EBITDA from the nearest GAAP performance measure, which is net (loss) income: | ||||||||||||||||||||
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 (a) | January 30, 2015 | |||||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||
| Net (loss) income | $ | (6,813 | ) | $ | (8,604 | ) | $ | (26,309 | ) | $ | 1,018 | |||||||||
| Income tax expense (benefit) | 10,971 | (2,960 | ) | (10,191 | ) | 1,560 | ||||||||||||||
| Interest expense | 13,704 | 7,421 | 43,927 | 20,684 | ||||||||||||||||
| Amortization and depreciation expense | 54,266 | 22,149 | 101,327 | 33,091 | ||||||||||||||||
| EBITDA | 72,128 | 18,006 | 108,754 | 56,353 | ||||||||||||||||
| Stock-based compensation expense | 1,099 | 7,553 | 4,106 | 9,684 | ||||||||||||||||
| Dividend equivalent expense | - | 19,628 | - | 28,681 | ||||||||||||||||
| Acquisition transaction costs | - | 1,581 | 8,342 | 11,237 | ||||||||||||||||
| Integration costs | 2,635 | - | 5,607 | - | ||||||||||||||||
| Loss on early extinguishment of debt | - | 9,298 | - | 9,298 | ||||||||||||||||
| Specified litigation matters | - | 54 | - | 3,595 | ||||||||||||||||
| Lease termination costs | - | - | 1,122 | - | ||||||||||||||||
| Other | 529 | 517 | 2,894 | 1,048 | ||||||||||||||||
| Adjusted EBITDA | $ | 76,391 | $ | 56,637 | $ | 130,825 | $ | 119,896 | ||||||||||||
| Adjusted EBITDA % of net sales | 10.4 | % | 12.4 | % | 7.6 | % | 11.2 | % | ||||||||||||
| The following table reconciles Free Cash Flow from Adjusted EBITDA: | ||||||||||||||||||||
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 29, 2016 | January 30, 2015 | January 29, 2016 (a) | January 30, 2015 | |||||||||||||||||
| Free Cash Flow: | ||||||||||||||||||||
| Adjusted EBITDA | $ | 76,391 | $ | 56,637 | $ | 130,825 | $ | 119,896 | ||||||||||||
| Less: | ||||||||||||||||||||
| Maintenance capital expenditures | (6,681 | ) | (2,549 | ) | (18,257 | ) | (6,879 | ) | ||||||||||||
| Free Cash Flow | $ | 69,710 | $ | 54,088 | $ | 112,568 | $ | 113,017 | ||||||||||||
| Free Cash Flow % of net sales | 9.4 | % | 11.8 | % | 6.5 | % | 10.5 | % | ||||||||||||
(a) Orchard Portfolio results are presented for the period from July 10, 2015 through January 29, 2016.
BLUESTEM BRANDS, INC.
Consolidated Statements of Operations
(unaudited — in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries, which are presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we are providing historical results of the Bluestem Brands, Inc. for the 13 weeks ended January 30, 2016, October 30, 2015, July 31, 2015, May 1, 2015, January 30, 2015, October 31, 2014, August 1, 2014 and May 2, 2014. The results of Orchard Brands Corporation and its subsidiaries are included in the results from the acquisition date of July 10, 2015.
Adjusted EBITDA, as presented, represents net (loss) income before income tax (benefit) expense, interest expense, amortization and depreciation expense, stock-based compensation expense, dividend equivalent expense, acquisition transaction costs, integration costs, loss on early extinguishment of debt, specified litigation matters, lease termination costs and other. Specified litigation matters are certain litigation contingencies that existed as of the November 7, 2014 acquisition of Bluestem by Bluestem Group, Inc. that are subject to limited indemnification by Bluestem's former stockholders. We provide this measure because we believe it is useful to investors in evaluating operating performance compared to other companies in Bluestem industry. As a non-GAAP measure, adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with Bluestem results of operations as determined in accordance with GAAP and is not based on any comprehensive set of accounting rules or principles. Non-GAAP measures should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP.
Adjusted Pro forma EBITDA, as presented, represents Adjusted EBITDA, as defined above, assuming that the SCUSA credit financing arrangement had been in place and all revolving customer accounts receivable were sold to SCUSA prior to the 2013 fiscal year. No pro forma adjustments were necessary for the three quarters of fiscal 2015 as the sale of receivables was fully transitioned by the end of fiscal 2014.
| 13 Weeks Ended | |||||||||||||||||||||||||||||||||||
| January 30, 2016 | October 30, 2015 | July 31, 2015 | May 1, 2015 | January 30, 2015 | October 31, 2014 | August 1, 2014 | May 2, 2014 | ||||||||||||||||||||||||||||
| Net sales | $ | 737,682 | $ | 474,957 | $ | 301,375 | $ | 206,175 | $ | 456,474 | $ | 213,324 | $ | 230,474 | $ | 171,251 | |||||||||||||||||||
| Cost of goods sold | 403,947 | 243,929 | 169,705 | 120,260 | 271,635 | 124,407 | 132,853 | 98,753 | |||||||||||||||||||||||||||
| Gross profit | 333,735 | 231,028 | 131,670 | 85,915 | 184,839 | 88,917 | 97,621 | 72,498 | |||||||||||||||||||||||||||
| Sales and marketing expenses | 166,657 | 137,783 | 65,077 | 42,717 | 74,010 | 42,583 | 42,991 | 37,211 | |||||||||||||||||||||||||||
| Net credit expense | 32,784 | 15,143 | 9,809 | 6,299 | 20,713 | 8,777 | 174 | (12,706 | ) | ||||||||||||||||||||||||||
| General and administrative expenses | 63,272 | 56,826 | 46,425 | 33,753 | 63,116 | 37,865 | 31,533 | 33,753 | |||||||||||||||||||||||||||
| Amortization and depreciation not included in | |||||||||||||||||||||||||||||||||||
| cost of goods sold | 53,163 | 18,067 | 15,102 | 12,051 | 21,847 | 3,128 | 3,158 | 3,179 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | - | - | - | - | 9,298 | - | - | ||||||||||||||||||||||||||||
| Operating income (loss) | 17,859 | 3,209 | (4,743 | ) | (8,905 | ) | (4,145 | ) | (3,436 | ) | 19,765 | 11,061 | |||||||||||||||||||||||
| Interest expense, net | 13,701 | 13,945 | 8,754 | 7,520 | 7,419 | 4,248 | 4,364 | 4,636 | |||||||||||||||||||||||||||
| (Loss) income before provision for income tax | 4,158 | (10,736 | ) | (13,497 | ) | (16,425 | ) | (11,564 | ) | (7,684 | ) | 15,401 | 6,425 | ||||||||||||||||||||||
| Income tax (benefit) expense | 10,971 | (15,604 | ) | (399 | ) | (5,159 | ) | (2,960 | ) | (3,295 | ) | 5,510 | 2,305 | ||||||||||||||||||||||
| Net (loss) income | $ | (6,813 | ) | $ | 4,868 | $ | (13,098 | ) | $ | (11,266 | ) | $ | (8,604 | ) | $ | (4,389 | ) | $ | 9,891 | $ | 4,120 | ||||||||||||||
| Income tax (benefit) expense | 10,971 | (15,604 | ) | (399 | ) | (5,159 | ) | (2,960 | ) | (3,295 | ) | 5,510 | 2,305 | ||||||||||||||||||||||
| Interest expense | 13,704 | 13,946 | 8,757 | 7,520 | 7,421 | 4,250 | 4,370 | 4,643 | |||||||||||||||||||||||||||
| Amortization and depreciation expense | 54,266 | 19,107 | 15,618 | 12,336 | 22,149 | 3,631 | 3,648 | 3,663 | |||||||||||||||||||||||||||
| EBITDA | 72,128 | 22,317 | 10,878 | 3,431 | 18,006 | 197 | 23,419 | 14,731 | |||||||||||||||||||||||||||
| Stock-based compensation expense | 1,099 | 1,059 | 939 | 1,009 | 7,553 | 706 | 703 | 722 | |||||||||||||||||||||||||||
| Dividend equivalent expense | - | - | - | - | 19,628 | 2,917 | 2,976 | 3,160 | |||||||||||||||||||||||||||
| Acquisition transaction costs | - | - | 6,530 | 1,812 | 1,581 | 6,772 | 1,335 | 1,549 | |||||||||||||||||||||||||||
| Integration Costs | 2,635 | 2,972 | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | - | - | - | - | 9,298 | - | - | - | |||||||||||||||||||||||||||
| Specified litigation matters | - | - | - | - | 54 | 719 | 805 | 2,017 | |||||||||||||||||||||||||||
| Lease termination costs | - | - | 1,122 | - | - | - | - | - | |||||||||||||||||||||||||||
| Other | 529 | 674 | 1,045 | 646 | 517 | 207 | 164 | 160 | |||||||||||||||||||||||||||
| Adjusted EBITDA | 76,391 | 27,022 | 20,514 | 6,898 | 56,637 | 11,518 | 29,402 | 22,339 | |||||||||||||||||||||||||||
| Net credit income pro forma adj | - | - | - | - | (653 | ) | (1,310 | ) | (2,503 | ) | (15,986 | ) | |||||||||||||||||||||||
| Other pro forma adj | - | - | - | - | (23 | ) | (243 | ) | (240 | ) | (238 | ) | |||||||||||||||||||||||
| Adjusted Pro forma EBITDA | $ | 76,391 | $ | 27,022 | $ | 20,514 | $ | 6,898 | $ | 55,961 | $ | 9,965 | $ | 26,659 | $ | 6,115 | |||||||||||||||||||
| Adjusted Pro forma EBITDA % of net sales | 10.4 | % | 5.7 | % | 6.8 | % | 3.3 | % | 12.3 | % | 4.7 | % | 11.6 | % | 3.6 | % | |||||||||||||||||||
|
BLUESTEM BRANDS, INC. Supplemental Financial Information (unaudited — in thousands, except average order size and average balance outstanding) |
|||||||||||||||||||||||||||||||||||
| 13 Weeks Ended | |||||||||||||||||||||||||||||||||||
| January 30, 2016 | October 30, 2015 | July 31, 2015 | May 1, 2015 | January 30, 2015 | October 31, 2014 | August 1, 2014 | May 2, 2014 | ||||||||||||||||||||||||||||
| Margins and Expenses as a Percentage of Net Sales: | |||||||||||||||||||||||||||||||||||
| Gross profit rate | 45.2 | % | 48.6 | % | 43.7 | % | 41.7 | % | 40.5 | % | 41.7 | % | 42.4 | % | 42.3 | % | |||||||||||||||||||
| Sales and marketing expenses | 22.6 | % | 29.0 | % | 21.6 | % | 20.7 | % | 16.2 | % | 20.0 | % | 18.7 | % | 21.7 | % | |||||||||||||||||||
| Net credit expense | 4.4 | % | 3.2 | % | 3.3 | % | 3.1 | % | 4.5 | % | 4.1 | % | 0.1 | % | (7.4 | )% | |||||||||||||||||||
| Selected Operating Data: | |||||||||||||||||||||||||||||||||||
| Revolving new customer credit accounts (a) | 266 | 169 | 150 | 143 | 288 | 152 | 153 | 138 | |||||||||||||||||||||||||||
| FreshStart new customer credit accounts (a) | 93 | 55 | 50 | 60 | 123 | 51 | 47 | 49 | |||||||||||||||||||||||||||
| PayCheck Direct new customer credit accounts (a) | 25 | 13 | 8 | 6 | 11 | 9 | 6 | 1 | |||||||||||||||||||||||||||
| Active accounts (b) | 1,683 | 1,686 | 1,682 | 1,686 | 1,593 | 1,534 | 1,519 | 1,473 | |||||||||||||||||||||||||||
| Average order size (c) | $ | 141 | $ | 110 | $ | 238 | $ | 221 | $ | 232 | $ | 228 | $ | 232 | $ | 214 | |||||||||||||||||||
| PayCheck Direct eligible client employees (d) | 6,323 | 6,216 | 4,316 | 2,648 | 2,348 | 2,449 | 2,194 | 1,815 | |||||||||||||||||||||||||||
| Revolving Serviced Portfolio Selected Credit Data (e): | |||||||||||||||||||||||||||||||||||
| Balance active accounts | 1,984 | 1,812 | 1,800 | 1,808 | 1,878 | 1,678 | 1,665 | 1,653 | |||||||||||||||||||||||||||
| Average balance outstanding | $ | 742 | $ | 677 | $ | 688 | $ | 672 | $ | 686 | $ | 619 | $ | 622 | $ | 599 | |||||||||||||||||||
| Customer accounts receivable (f) | $ | 1,472,335 | $ | 1,225,964 | $ | 1,237,579 | $ | 1,214,618 | $ | 1,287,526 | $ | 1,038,208 | $ | 1,035,927 | $ | 990,008 | |||||||||||||||||||
| Balances 30+ days delinquent (g) | $ | 216,089 | $ | 215,964 | $ | 201,406 | $ | 186,478 | $ | 189,092 | $ | 184,780 | $ | 173,326 | $ | 158,300 | |||||||||||||||||||
| Balances 30+ days delinquent as a percentage of total | |||||||||||||||||||||||||||||||||||
| customer accounts receivable (h) | 14.7 | % | 17.6 | % | 16.3 | % | 15.4 | % | 14.7 | % | 17.8 | % | 16.7 | % | 16.0 | % | |||||||||||||||||||
| Average customer accounts receivable | $ | 1,418,984 | $ | 1,249,882 | $ | 1,252,998 | $ | 1,241,546 | $ | 1,220,616 | $ | 1,043,445 | $ | 1,035,569 | $ | 1,009,848 | |||||||||||||||||||
| Annualized finance charge and fee income as a percentage of | |||||||||||||||||||||||||||||||||||
| average customer accounts receivable (i) | 26.4 | % | 27.2 | % | 28.8 | % | 29.7 | % | 28.7 | % | 28.6 | % | 30.4 | % | 29.2 | % | |||||||||||||||||||
| Net principal charge-offs | $ | 63,196 | $ | 58,835 | $ | 60,863 | $ | 52,841 | $ | 58,729 | $ | 45,722 | $ | 39,852 | $ | 37,820 | |||||||||||||||||||
| Annualized net principal charge-offs as a percentage of | |||||||||||||||||||||||||||||||||||
| average customer accounts receivable (j) | 17.8 | % | 18.8 | % | 19.4 | % | 17.0 | % | 19.2 | % | 17.5 | % | 15.4 | % | 15.0 | % | |||||||||||||||||||
(a) Customers that have made their initial order on account during the fiscal period presented. Revolving new customer credit accounts excludes FreshStart graduates whom were initially included in FreshStart new customer credit accounts when their initial order was made.
(b) Revolving credit customers that have made at least one purchase on account within the previous twelve fiscal months and at least one payment on account since origination.
(c) Retail merchandise sales including shipping and handling revenue divided by the number of merchandise orders fulfilled during the fiscal period presented.
(d) PayCheck Direct clients' full-time active employees with a tenure greater than six months, are at least 18 years old, and have met certain minimum annual earnings.
(e) Revolving serviced portfolio includes Fingerhut and Gettington.com revolving credit accounts.
(f) Customer accounts receivable excludes impact from purchase accounting fair value adjustment.
(g) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end.
(h) Delinquent balances as of the customers' statement cycle dates prior to or on fiscal period end as a percentage of total customer accounts receivable as of the customers' statement cycle dates prior to or on fiscal period end.
(i) Finance charge and fee income rate represents finance charge and fee income as a percentage of average customer accounts receivable for the 13 weeks presented above annualized to 52-week periods for comparability.
(j) Net principal charge-off rate represents net principal charge-offs as a percentage of average customer accounts receivable for the 13 weeks presented above annualized to 52-week periods for comparability.
BLUESTEM BRANDS, INC.
Supplemental Financial Information
(unaudited — in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries, we are providing historical results of Bluestem Brands, Inc. for the 13 weeks ended January 30, 2016, October 30, 2015, July 31, 2015, May 1, 2015, January 30, 2015, October 31, 2014, August 1, 2014 and May 2, 2014. Bluestem uses the following measure that are not in accordance with, or an alternative to, measures prepared in accordance with GAAP (non-GAAP measures):
Adjusted general and administrative expenses, as presented, is defined as general and administrative expenses adjusted for stock-based compensation expense, dividend equivalent expense, acquisition transaction costs, integration costs, specified litigation matters, lease termination costs and other. Specified litigation matters are certain litigation contingencies that existed as of the November 7, 2014 acquisition of Bluestem by Bluestem Group that are subject to limited indemnification by Bluestem's former stockholders.
Free cash flow, as presented, represents adjusted pro forma EBITDA, as defined above, less maintenance capital expenditures.
| 13 Weeks Ended | |||||||||||||||||||||||||||||||||||
| January 30, 2016 | October 30, 2015 | July 31, 2015 | May 1, 2015 | January 30, 2015 | October 31, 2014 | August 1, 2014 | May 2, 2014 | ||||||||||||||||||||||||||||
| Sales by Merchandise Category: | |||||||||||||||||||||||||||||||||||
| Home | $ | 190,164 | $ | 133,051 | $ | 131,833 | $ | 98,706 | $ | 154,188 | $ | 93,529 | $ | 110,682 | $ | 81,119 | |||||||||||||||||||
| Entertainment | 248,359 | 102,921 | 101,861 | 84,368 | 237,214 | 94,497 | 96,387 | 69,201 | |||||||||||||||||||||||||||
| Fashion | 346,440 | 273,925 | 85,745 | 32,996 | 87,303 | 35,549 | 34,891 | 27,604 | |||||||||||||||||||||||||||
| Total merchandise sales (a) | 784,963 | 509,897 | 319,439 | 216,070 | 478,705 | 223,575 | 241,960 | 177,924 | |||||||||||||||||||||||||||
| Returns and allowances | (69,043 | ) | (53,685 | ) | (26,556 | ) | (13,949 | ) | (28,804 | ) | (14,612 | ) | (15,885 | ) | (10,602 | ) | |||||||||||||||||||
| Commissions and other revenue | 21,762 | 18,745 | 8,492 | 4,054 | 6,573 | 4,361 | 4,399 | 3,929 | |||||||||||||||||||||||||||
| Net sales | $ | 737,682 | $ | 474,957 | $ | 301,375 | $ | 206,175 | $ | 456,474 | $ | 213,324 | $ | 230,474 | $ | 171,251 | |||||||||||||||||||
| Adjusted General and Administrative Expenses: | |||||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 63,272 | $ | 56,826 | $ | 46,425 | $ | 33,753 | $ | 63,116 | $ | 37,865 | $ | 31,533 | $ | 33,753 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 1,099 | 1,059 | 939 | 1,009 | 7,553 | 706 | 703 | 722 | |||||||||||||||||||||||||||
| Dividend equivalent expense | - | - | - | - | 19,628 | 2,917 | 2,976 | 3,160 | |||||||||||||||||||||||||||
| Acquisition transaction costs | - | - | 6,530 | 1,812 | 1,581 | 6,772 | 1,335 | 1,549 | |||||||||||||||||||||||||||
| Integration Costs | 2,635 | 2,972 | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Specified litigation matters | - | - | - | - | 54 | 719 | 805 | 2,017 | |||||||||||||||||||||||||||
| Lease termination costs | - | - | 1,122 | - | - | - | - | - | |||||||||||||||||||||||||||
| Other | 402 | 546 | 918 | 531 | 401 | 92 | 48 | 55 | |||||||||||||||||||||||||||
| Adjusted general and administrative expenses | $ | 59,136 | $ | 52,249 | $ | 36,916 | $ | 30,401 | $ | 33,899 | $ | 26,659 | $ | 25,666 | $ | 26,250 | |||||||||||||||||||
| Adjusted general and administrative expenses | |||||||||||||||||||||||||||||||||||
| % of net sales | 8.0 | % | 11.0 | % | 12.2 | % | 14.7 | % | 7.4 | % | 12.5 | % | 11.1 | % | 15.3 | % | |||||||||||||||||||
| Free Cash Flow: | |||||||||||||||||||||||||||||||||||
| Adjusted Pro forma EBITDA | $ | 76,391 | $ | 27,022 | $ | 20,514 | $ | 6,898 | $ | 55,961 | $ | 9,965 | $ | 26,659 | $ | 6,115 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Maintenance capital expenditures | 6,681 | 4,748 | 4,130 | 2,698 | 2,549 | 1,931 | 1,889 | 510 | |||||||||||||||||||||||||||
| Free Cash Flow | $ | 69,710 | $ | 22,274 | $ | 16,384 | $ | 4,200 | $ | 53,412 | $ | 8,034 | $ | 24,770 | $ | 5,605 | |||||||||||||||||||
(a) Total merchandise sales includes shipping and handling revenue and is net of sales discounts.
ORCHARD BRANDS CORPORATION
Consolidated Statements of Operations
(unaudited — in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries, we are providing certain consolidated stand-alone historical results of Orchard Brands Corporation and its subsidiaries for the 13 weeks ended June 27, 2015, March 28, 2015, December 27, 2014, September 27, 2014, June 28, 2014 and March 29, 2014. These periods represent the first two quarters of Orchard Brands Corporation's fiscal year 2015 and four quarters of fiscal year 2014. This information is being presented to provide an understanding of the historic consolidated results of Orchard Brands Corporation prior to ownership by Bluestem Brands, Inc. This information does not include any adjustments or otherwise give effect to any changes to the operations of Orchard Brands Corporation or its subsidiaries that might result from Bluestem Brand’s acquisition of Orchard Brands Corporation. The results for the periods presented are not included in the results of Bluestem Brands, Inc. Orchard Brand Corporation’s consolidated results of operations for prior periods are not necessarily indicative of future performance.
Adjusted EBITDA, as presented, represents net income (loss) before income tax expense, interest expense, amortization and depreciation expense, stock-based compensation expense, special bonus compensation expense, restructuring costs, acquisition transaction costs and other. We provide this measure because we believe it is useful to investors in evaluating operating performance compared to other companies in Orchard Brand’s industry. As a non-GAAP measure, adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with Orchards Brands Corporation's results of operations as determined in accordance with GAAP and is not based on any comprehensive set of accounting rules or principles. Non-GAAP measures should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP.
| 13 Weeks Ended | |||||||||||||||||||||||||||
| June 27, 2015 | March 28, 2015 | December 27, 2014 | September 27, 2014 | June 28, 2014 | March 29, 2014 | ||||||||||||||||||||||
| Net sales | $ | 276,634 | $ | 213,141 | $ | 304,719 | $ | 224,674 | $ | 274,070 | $ | 218,428 | |||||||||||||||
| Cost of goods sold | 121,704 | 97,465 | 140,669 | 104,336 | 121,091 | 101,290 | |||||||||||||||||||||
| Gross profit | 154,930 | 115,676 | 164,050 | 120,338 | 152,979 | 117,138 | |||||||||||||||||||||
| Operating expenses | 137,149 | 111,971 | 149,346 | 110,324 | 138,467 | 112,761 | |||||||||||||||||||||
| Operating income | 17,781 | 3,705 | 14,704 | 10,014 | 14,512 | 4,377 | |||||||||||||||||||||
| Interest expense | 4,171 | 4,292 | 4,714 | 4,785 | 5,047 | 5,055 | |||||||||||||||||||||
| Income (loss) before provision for income tax | 13,610 | (587 | ) | 9,990 | 5,229 | 9,465 | (678 | ) | |||||||||||||||||||
| Income tax expense | 5,240 | (226 | ) | 3,589 | 2,712 | 3,664 | 137 | ||||||||||||||||||||
| Net income (loss) | $ | 8,370 | $ | (361 | ) | $ | 6,401 | $ | 2,517 | $ | 5,801 | $ | (815 | ) | |||||||||||||
| Income tax expense | 5,240 | (226 | ) | 3,589 | 2,712 | 3,664 | 137 | ||||||||||||||||||||
| Interest expense | 4,171 | 4,292 | 4,714 | 4,785 | 5,047 | 5,055 | |||||||||||||||||||||
| Amortization and depreciation expense | 3,684 | 3,495 | 3,846 | 4,062 | 3,358 | 3,810 | |||||||||||||||||||||
| EBITDA | 21,465 | 7,200 | 18,550 | 14,076 | 17,870 | 8,187 | |||||||||||||||||||||
| Stock-based compensation expense | 179 | 179 | 4,409 | 735 | 3,712 | - | |||||||||||||||||||||
| Special bonus compensation expense | - | - | 2,863 | - | - | - | |||||||||||||||||||||
| Restructuring costs | 334 | - | - | - | - | 122 | |||||||||||||||||||||
| Acquisition transaction costs | 229 | - | - | - | - | - | |||||||||||||||||||||
| Other (a) | 33 | 4 | 804 | 64 | 496 | 1,283 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 22,240 | $ | 7,383 | $ | 26,626 | $ | 14,875 | $ | 22,078 | $ | 9,592 | |||||||||||||||
| Adjusted EBITDA % of net sales | 8.0 | % | 3.5 | % | 8.7 | % | 6.6 | % | 8.1 | % | 4.4 | % | |||||||||||||||
(a) Includes one time recruiting costs, board of directors payments, common platform conversion costs, vacant positions and other.
|
ORCHARD BRANDS CORPORATION Supplemental Financial Information (unaudited — in thousands, except average order size) |
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| 13 Weeks Ended | |||||||||||||||||||||||
| June 27, 2015 | March 28, 2015 | December 27, 2014 | September 27, 2014 | June 28, 2014 | March 29, 2014 | ||||||||||||||||||
| Supplemental Financial Data: | |||||||||||||||||||||||
| Sales by merchandise category: | |||||||||||||||||||||||
| Home | $ | 28,681 | $ | 28,095 | $ | 34,397 | $ | 25,962 | $ | 29,039 | $ | 29,470 | |||||||||||
| Fashion | 280,483 | 203,227 | 299,630 | 218,626 | 278,355 | 208,533 | |||||||||||||||||
| Total merchandise sales (a) | 309,164 | 231,322 | 334,027 | 244,588 | 307,394 | 238,003 | |||||||||||||||||
| Returns and allowances | (47,752 | ) | (31,248 | ) | (43,099 | ) | (32,585 | ) | (47,015 | ) | (31,536 | ) | |||||||||||
| Commissions and other revenue | 15,222 | 13,067 | 13,791 | 12,671 | 13,691 | 11,961 | |||||||||||||||||
| Net sales | $ | 276,634 | $ | 213,141 | $ | 304,719 | $ | 224,674 | $ | 274,070 | $ | 218,428 | |||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling and marketing expenses | $ | 105,731 | $ | 82,555 | $ | 110,715 | $ | 80,146 | $ | 103,114 | $ | 82,069 | |||||||||||
| General and administrative expenses | 27,734 | 25,921 | 34,785 | 26,116 | 31,995 | 26,882 | |||||||||||||||||
| Amortization and depreciation expenses | 3,684 | 3,495 | 3,846 | 4,062 | 3,358 | 3,810 | |||||||||||||||||
| Operating expenses | $ | 137,149 | $ | 111,971 | $ | 149,346 | $ | 110,324 | $ | 138,467 | $ | 112,761 | |||||||||||
| Other Financial Data: | |||||||||||||||||||||||
| Sourcing overhead expenses (b) | 6,445 | 6,967 | 6,547 | 6,740 | 6,585 | 6,761 | |||||||||||||||||
| Premium expenses (free gift) (c) | 1,904 | 1,544 | 1,918 | 1,842 | 2,115 | 1,624 | |||||||||||||||||
| Fulfillment variable expenses (d) | 7,181 | 6,602 | 7,802 | 6,490 | 7,170 | 6,711 | |||||||||||||||||
| Fulfillment related depreciation expense (e) | 283 | 243 | 258 | 233 | 249 | 307 | |||||||||||||||||
| Other (f) | 298 | 352 | 171 | 352 | 211 | 302 | |||||||||||||||||
| Selected Operating Data: | |||||||||||||||||||||||
| Active customers (g) | 8,020 | 7,966 | 7,928 | 7,854 | 7,928 | 7,889 | |||||||||||||||||
| New gross customers (h) | 516 | 407 | 554 | 336 | 468 | 381 | |||||||||||||||||
| Average order size (i) | $ | 81 | $ | 72 | $ | 78 | $ | 75 | $ | 79 | $ | 73 | |||||||||||
(a) Total merchandise sales includes shipping and handling revenue and is net of sales discounts.
(b) Sourcing overhead expenses are included in cost of goods sold in the stand-alone historical results of Orchard Brands Corporation. Sourcing overhead expenses are included in general and administrative expense in the consolidated Bluestem Brands, Inc. results.
(c) Premium expenses are included in cost of goods sold in the stand-alone historical results of Orchard Brands Corporation. Premium expenses are included in selling and marketing expense in the consolidated Bluestem Brands, Inc. results.
(d) Fulfillment variable expenses are included in operating expenses of the stand-alone historical results of Orchard Brands Corporation. Fulfillment variable expenses are included in cost of goods sold of the consolidated Bluestem Brands, Inc. results.
(e) Fulfillment related depreciation expense is included in operating expenses of the stand-alone historical results of Orchard Brands Corporation. Fullfillment related depreciation expense is included in cost of goods sold of consolidated Bluestem Brands, Inc. results.
(f) Other is included in cost of goods sold of the stand-alone historical results of Orcard Brands Corporation. Other is included in Net Sales of Bluestem Brands, Inc. results.
(g) Customers that have made at least one purchase within the previous twelve fiscal months.
(h) Customers who have made a first time purchase from a particular brand within the Orchard Portfolio during the period presented.
(i) Retail merchandise sales including shipping and handling revenue divided by the number of merchandise orders fulfilled during the fiscal period presented.
ORCHARD BRANDS CORPORATION
Financial Measures Conformed to Bluestem Brands, Inc.'s Basis of Presentation
(unaudited — in thousands)
To supplement the consolidated stand-alone historical results of Orchard Brands Corporation and its subsidiaries which are presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), and based on historical Orchard Brands Corporation's basis of presentation, the following measures are conformed to Bluestem Brands, Inc.'s basis of presentation for comparison purposes. Bluestem Brands, Inc.'s basis of presentation is in accordance with GAAP. Periods succeeding the acquisition of Orchard Brands Corporation on July 10, 2015 will be presented on Bluestem Brands, Inc.'s basis of presentation. The periods presented are based on the historical Orchard Brands Corporation fiscal second quarter ended June 27, 2015, first quarter ended March 28, 2015 and fiscal year ended December 27, 2014.
Adjusted net sales, as presented, is defined as net sales plus other.
Adjusted gross profit rate, as presented, is defined as adjusted net sales less cost of goods sold, sourcing overhead expenses, other and premium expenses plus fulfillment variable expenses and fulfillment related depreciation expense divided by adjusted net sales.
Adjusted selling and marketing expenses, as presented, is defined as selling and marketing expenses plus premium expenses, stock-based compensation expense, special bonus compensation expense, restructuring costs, acquisition transaction costs and other.
Adjusted general and administrative expenses, as presented, is defined as general and administrative expenses plus sourcing overhead expenses less fulfillment variable expenses, stock-based compensation expense, special bonus compensation expense, restructuring costs, acquisition transaction costs and other expenses.
Free cash flow, as presented, represents adjusted pro forma EBITDA, as defined above, less maintenance capital expenditures.
| 13 Weeks Ended | |||||||||||||||||||||||||||
| June 27, 2015 | March 28, 2015 | December 27, 2014 | September 27, 2014 | June 28, 2014 | March 29, 2014 | ||||||||||||||||||||||
| Adjusted Net Sales: | |||||||||||||||||||||||||||
| Net sales | $ | 276,634 | $ | 213,141 | $ | 304,719 | $ | 224,674 | $ | 274,070 | $ | 218,428 | |||||||||||||||
| Plus: Other | 298 | 352 | 171 | 352 | 211 | 302 | |||||||||||||||||||||
| Adjusted Net Sales | $ | 276,932 | $ | 213,493 | $ | 304,890 | $ | 225,026 | $ | 274,281 | $ | 218,730 | |||||||||||||||
| Adjusted Gross Profit: | |||||||||||||||||||||||||||
| Cost of goods sold | $ | 121,704 | $ | 97,465 | $ | 140,669 | $ | 104,336 | $ | 121,091 | $ | 101,290 | |||||||||||||||
| Plus: Fulfillment variable expenses | 7,181 | 6,602 | 7,802 | 6,490 | 7,170 | 6,711 | |||||||||||||||||||||
| Fulfillment related depreciation expenses | 283 | 243 | 258 | 233 | 249 | 307 | |||||||||||||||||||||
| Less: Sourcing overhead expenses | (6,445 | ) | (6,967 | ) | (6,547 | ) | (6,740 | ) | (6,585 | ) | (6,761 | ) | |||||||||||||||
| Other | 298 | 352 | 171 | 352 | 211 | 302 | |||||||||||||||||||||
| Premium expenses | (1,904 | ) | (1,544 | ) | (1,918 | ) | (1,842 | ) | (2,115 | ) | (1,624 | ) | |||||||||||||||
| Adjusted cost of goods sold | 121,117 | 96,151 | 140,435 | 102,828 | 120,021 | 100,226 | |||||||||||||||||||||
| Adjusted gross profit | $ | 155,815 | $ | 117,342 | $ | 164,455 | $ | 122,198 | $ | 154,260 | $ | 118,504 | |||||||||||||||
| Adjusted gross profit rate | 56.3 | % | 55.0 | % | 53.9 | % | 54.3 | % | 56.2 | % | 54.2 | % | |||||||||||||||
| Adjusted Selling and Marketing Expenses: | |||||||||||||||||||||||||||
| Selling and marketing expenses | $ | 105,731 | $ | 82,555 | $ | 110,715 | $ | 80,146 | $ | 103,114 | $ | 82,069 | |||||||||||||||
| Plus: Premium expenses | 1,904 | 1,544 | 1,918 | 1,842 | 2,115 | 1,624 | |||||||||||||||||||||
| Adjusted selling and marketing expenses | $ | 107,635 | $ | 84,099 | $ | 112,633 | $ | 81,988 | $ | 105,229 | $ | 83,693 | |||||||||||||||
| Adjusted selling and marketing expenses | |||||||||||||||||||||||||||
| % of Adjusted Net Sales | 38.9 | % | 39.4 | % | 36.9 | % | 36.4 | % | 38.4 | % | 38.3 | % | |||||||||||||||
| Adjusted General and Administrative Expenses: | |||||||||||||||||||||||||||
| General and administrative expenses | $ | 27,734 | $ | 25,921 | $ | 34,785 | $ | 26,116 | $ | 31,995 | $ | 26,882 | |||||||||||||||
| Plus: Sourcing overhead expenses | 6,445 | 6,967 | 6,547 | 6,740 | 6,585 | 6,761 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||
| Fulfillment variable expenses | 7,181 | 6,602 | 7,802 | 6,490 | 7,170 | 6,711 | |||||||||||||||||||||
| Stock-based compensation expense | 179 | 179 | 4,409 | 735 | 3,712 | - | |||||||||||||||||||||
| Special bonus compensation expense | - | - | 2,863 | - | - | - | |||||||||||||||||||||
| Restructuring costs | 334 | - | - | - | - | 122 | |||||||||||||||||||||
| Acquisition transaction costs | 229 | - | - | - | - | - | |||||||||||||||||||||
| Other | 33 | 4 | 804 | 64 | 496 | 1,283 | |||||||||||||||||||||
| Adjusted general and administrative expenses | $ | 26,223 | $ | 26,103 | $ | 25,454 | $ | 25,567 | $ | 27,202 | $ | 25,526 | |||||||||||||||
| Adjusted general and administrative expenses | |||||||||||||||||||||||||||
| % of Adjusted Net Sales | 9.5 | % | 12.2 | % | 8.3 | % | 11.4 | % | 9.9 | % | 11.7 | % | |||||||||||||||
| Free Cash Flow: | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 22,240 | $ | 7,383 | $ | 26,626 | $ | 14,875 | $ | 22,078 | $ | 9,592 | |||||||||||||||
| Less: | |||||||||||||||||||||||||||
| Maintenance capital expenditures | 1,196 | 1,018 | 3,475 | 1,962 | 2,092 | 1,301 | |||||||||||||||||||||
| Free Cash Flow | $ | 21,044 | $ | 6,365 | $ | 23,151 | $ | 12,913 | $ | 19,986 | $ | 8,291 | |||||||||||||||