UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
Form 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 15, 2015
 
 
 
hhgregg, Inc.
(Exact name of registrant as specified in its charter)
 
 
 

Commission File Number: 001-33600
 
 
 
 
Delaware
 
20-8819207
(State or other jurisdiction
of incorporation)
 
(IRS Employer
Identification No.)
4151 East 96th Street
Indianapolis, Indiana 46240
(Address of principal executive offices, including zip code)
(317) 848-8710
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.
Results of Operations and Financial Condition
On May 15, 2015 hhgregg, Inc. (the “Registrant”) issued a press release announcing its fourth quarter and year-end results for the periods ended March 31, 2015. The press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this item.
The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.
 
Item 9.01.
Financial Statements and Exhibits
 
Exhibit No.
  
Description
99.1
  
Press release of hhgregg, Inc. dated May 15, 2015






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
hhgregg, Inc.
 
 
 
Date: May 15, 2015
 
 
By:
/s/ Robert J. Riesbeck
 
 
 
 
Robert J. Riesbeck
 
 
 
 
Chief Financial Officer






Exhibit Index
 
Exhibit No.
  
Description
99.1
  
Press release of hhgregg, Inc. dated May 15, 2015







Exhibit 99.1
hhgregg Announces Fourth Fiscal Quarter and Full Year Operating Results
Fourth Quarter Summary
 
Net sales decreased 9.8% to $485.6 million
Comparable store sales decreased 10.0%
Net loss per diluted share was $0.91, compared to net loss per diluted share of $0.25 in the prior year
Net loss per diluted share, as adjusted, was $0.47, compared to net loss per diluted share, as adjusted, of $0.17 in the prior year

INDIANAPOLIS, May 15, 2015 - hhgregg, Inc. (NYSE: HGG):
 
 
Three Months Ended
March 31,
 
Twelve Months Ended
March 31,
(unaudited, dollar amounts in thousands, except per share data)
 
2015
 
2014
 
2015
 
2014
Net sales
 
$
485,603

 
$
538,280

 
$
2,129,374

 
$
2,338,570

Net sales % decrease
 
(9.8
)%
 
(9.9
)%
 
(8.9
)%
 
(5.5
)%
Comparable store sales % decrease (1)
 
(10.0
)%
 
(9.9
)%
 
(9.2
)%
 
(7.3
)%
Gross profit as % of net sales
 
28.6
 %

28.3
 %

28.5
 %

28.4
 %
Gross profit as % of net sales, as adjusted (2)
 
28.6
 %

28.7
 %

28.5
 %

28.5
 %
SG&A as % of net sales
 
24.7
 %

22.6
 %

22.9
 %

21.1
 %
SG&A as % of net sales, as adjusted (2)
 
24.7
 %

22.3
 %

22.9
 %

21.0
 %
Net advertising expense as % of net sales
 
6.1
 %
 
5.7
 %
 
6.0
 %
 
5.3
 %
Depreciation and amortization expense as % of net sales
 
1.8
 %
 
2.0
 %
 
1.9
 %
 
1.8
 %
(Loss) income from operations as % of net sales
 
(5.1
)%
 
(2.1
)%
 
(4.7
)%
 
0.1
 %
(Loss) income from operations as % of net sales, as adjusted (2)
 
(4.0
)%
 
(1.4
)%
 
(2.4
)%
 
0.3
 %
Net interest expense as % of net sales
 
0.1
 %
 
0.1
 %
 
0.1
 %
 
0.1
 %
Net (loss) income
 
$
(25,228
)
 
$
(7,239
)
 
$
(132,746
)
 
$
228

Net (loss) income, as adjusted (2)
 
$
(13,056
)
 
$
(4,846
)
 
$
(37,516
)
 
$
2,807

Net (loss) income per diluted share
 
$
(0.91
)
 
$
(0.25
)
 
$
(4.72
)
 
$
0.01

Net (loss) income per diluted share, as adjusted (2)
 
$
(0.47
)
 
$
(0.17
)
 
$
(1.33
)
 
$
0.09

Weighted average shares outstanding - diluted
 
27,663,764

 
28,963,481

 
28,129,596

 
30,683,989

Number of stores open at the end of the period
 
 
 
 
 
228

 
228

 
(1)
Comprised of net sales of stores in operation for at least 14 full months, including remodeled and relocated stores, as well as net sales for the Company’s website. Stores that are closed are excluded from the calculation the month before closing.
(2)
Fiscal 2015 amounts are adjusted to exclude the impact of establishing a valuation allowance for deferred tax assets and fixed asset impairment charges. Fiscal 2014 amounts are adjusted to exclude expense from the write down of inventory for the exit from the contract-based mobile phone business, the write-off of store fixtures associated with the Company’s changing product mix and impairment charges. See the attached reconciliation of non-GAAP measures.


Dennis May, President and Chief Executive Officer, commented, “Our fourth quarter results were challenging, however, I am pleased with the significant progress we have made on our transformational efforts. Our top fiscal 2016 initiatives are centered on improving our cost structure through the optimization of our marketing dollars, the reduction of our operating expenses and more efficiently managing our working capital, along with reversing our negative sales trends.” May continued, “On the expense side, we have identified over $50 million of savings. These savings are inclusive of both marketing and operating expenses. We plan to reduce and re-invest advertising dollars to more effective channels, further reducing our reliance on print media. Additionally, we have identified several areas throughout the company where we believe we can be more efficient with our spend. In addition to operating expenses, we will also be working to selectively rationalize our footprint and work to free up working capital through inventory optimization. From a top-line perspective, we will continue to expand our Fine Lines departments within the appliance category given the strong results we are seeing from our Fine Lines





business, continue to focus on sales of larger screen 4K TV’s, and continue to refine our offerings within our other categories. We remain confident that through the combination of our savings and revenue initiatives, we will return to positive adjusted EBITDA in fiscal year 2016.”
HIGHLIGHTS FOR THE FOURTH QUARTER
Revenue Highlights
Our revenue performance in the quarter was driven primarily by a comparable store sales decline. Net sales mix and comparable store sales percentage changes by product category for the three-, and 12-month periods ended March 31, 2015 and 2014 were as follows:
 
 
 
Net Sales Mix Summary
 
Comparable Store Sales Summary
 
 
Three Months Ended
March 31,
 
Twelve Months Ended
March 31,
 
Three Months Ended
March 31,
 
Twelve Months Ended
March 31,
 
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Appliances
 
51
%
 
48
%
 
51
%
 
47
%
 
(5.0
)%
 
0.5
 %
 
(3.1
)%
 
3.0
 %
Consumer electronics (1)
 
38
%
 
38
%
 
37
%
 
38
%
 
(9.8
)%
 
(18.9
)%
 
(10.9
)%
 
(18.8
)%
Computers and tablets
 
6
%
 
8
%
 
7
%
 
10
%
 
(37.6
)%
 
(22.6
)%
 
(34.0
)%
 
(14.7
)%
Home products (2)
 
5
%
 
6
%
 
5
%
 
5
%
 
(12.5
)%
 
(0.4
)%
 
(4.7
)%
 
35.8
 %
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
(10.0
)%
 
(9.9
)%
 
(9.2
)%
 
(7.3
)%
 
(1)
Primarily consists of televisions, audio, personal electronics and accessories.
(2)
Primarily consists of furniture and mattresses.

Our comparable store sales drivers for the three months ended March 31, 2015 are summarized below:
 
 
Comparable Store Sales
 
Comparable Store Sales Excluding Mobile and Fitness
 
Average Selling Price
 
Sales Volume
Appliances
 
(5.0
)%
 
(5.0
)%
 
Decrease
 
Decrease
Consumer electronics (1)
 
(9.8
)%
 
(9.8
)%
 
Increase
 
Decrease
Computers and tablets
 
(37.6
)%
 
(33.4
)%
 
Decrease
 
Decrease
Home products (2)
 
(12.5
)%
 
(2.6
)%
 
Increase
 
Decrease
Total
 
(10.0
)%
 
(9.0
)%
 
 
 
 

(1)
Primarily consists of televisions, audio, personal electronics and accessories.
(2)
Primarily consists of furniture and mattresses.
Gross Margin Highlights
Our gross profit margin was reasonably stable in the fourth quarter. On a reported basis, our gross profit margin, expressed as gross profit as a percentage of net sales, increased approximately 27 basis points for the three month period ended March 31, 2015 to 28.6% from 28.3% for the comparable prior year period. On an adjusted basis, our gross profit margin decreased by 10 basis points.
In the three month period ended March 31, 2014, we incurred an approximately $1.7 million charge related to the write down of inventory for the exit from the contract-based mobile phone business.
In the three month period ended March 31, 2015, our slight decrease in gross profit margin, as adjusted, for the period was a result of decreases in gross profit margin rates for the appliances and consumer electronics categories, partially offset by a favorable product sales mix shift.







Expense Management Highlights
We continue to manage our cost structure to more closely align with our lower sales levels and to enhance our ability to reverse our recent sales trends and to position our company for growth.
Selling, general and administrative expense (“SG&A”) in the three month period ended March 31, 2014 includes a $1.9 million charge for the write-off of store fixtures associated with the Company’s changing product mix.
The increase in SG&A as a percentage of net sales to 24.7% from 22.3% for the comparable prior period was a result of:
62 basis point increase in bank transactions fees associated with higher cost financing options offered to the customer and higher private label credit card penetration;
41 basis point increase in occupancy costs due to the deleveraging effect of our net sales decline;
32 basis point increase, or $1.6 million, in consulting expenses to assist in rationalizing our marketing spend, optimizing our logistics network and accelerating our transformation efforts. The impact of these expenses was $0.06 of net loss per diluted share;
16 basis point increase in product services from a higher percentage of home delivery; and
increases in other SG&A expenses as a percentage of net sales primarily due to the deleveraging effect of the net sales decline.
The increase in net advertising expense as a percentage of net sales was primarily due to the deleveraging effect of the net sales decline. We plan to reduce advertising spend and rebalance our spending among the different advertising mediums in the future.
HIGHLIGHTS FOR THE FISCAL YEAR
Revenue Highlights
Our revenue performance for the year was driven primarily by our comparable store sales decline.
Our comparable store sales drivers for the fiscal year 2015 are summarized below:
 
 
Comparable Store Sales
 
Comparable Store Sales Excluding Mobile and Fitness
 
Average Selling Price
 
Sales Volume
Appliances
 
(3.1
)%
 
(3.1
)%
 
Decrease
 
Decrease
Consumer electronics (1)
 
(10.9
)%
 
(10.9
)%
 
Increase
 
Decrease
Computers and tablets
 
(34.0
)%
 
(28.6
)%
 
Decrease
 
Decrease
Home products (2)
 
(4.7
)%
 
0.5
 %
 
Increase
 
Decrease
Total
 
(9.2
)%
 
(8.3
)%
 
 
 
 

(1)
Primarily consists of televisions, audio, personal electronics and accessories.
(2)
Primarily consists of furniture and mattresses.
Gross Margin Highlights
Our gross profit margin for the fiscal year 2015 was in line with fiscal year 2014. On a reported basis, our gross profit margin, expressed as gross profit as a percentage of net sales, increased slightly for fiscal year 2015 to 28.5% from 28.4% for fiscal year 2014. On an adjusted basis, our gross profit margin did not change from the prior year.
For fiscal 2014, we incurred an approximately $1.7 million charge related to the write down of inventory for the exit from the contract-based mobile phone business.
For fiscal year 2015, we experienced a favorable sales mix shift to product categories with higher gross profit margin rates and an increase in gross profit margin for the video category due to an increase in sales of larger screen and more premium featured televisions, offset by a decrease in gross profit margin rates across the remaining categories.






Expense Management Highlights
Throughout the year, we had an unrelenting focus on managing our cost structure to more closely align with our lower sales levels. We did this while simultaneously working on initiatives to enhance our ability to reverse our comparable store sales trends and to position our company for growth.
SG&A in fiscal 2014 includes a $1.9 million charge for the write-off of store fixtures associated with the Company’s changing product mix.
The increase in SG&A as a percentage of net sales was a result of:
43 basis point increase in occupancy costs as a percentage of net sales due to the deleveraging effect of the net sales decline;
26 basis point increase in bank transactions fees associated with higher cost financing options to the customer and higher private label credit card penetration;
19 basis point increase in product services from a higher percentage of home delivery;
18 basis point increase, or $3.2 million, in consulting expenses to assist in rationalizing our marketing spend, optimizing our logistics network and accelerating our transformation efforts. The impact of these expenses was $0.11 of net loss per diluted share; and
Increases in other SG&A expenses primarily due to the deleveraging effect of the net sales decline.
The increase in net advertising expense as a percentage of net sales was primarily due to the deleveraging effect of the net sales decline and less vendor support due to programs being based on a percentage of sales. We plan to reduce advertising spend and rebalance our spending among the different advertising mediums in fiscal 2016.
Asset Impairment and Other Charges
During three month period ended March 31, 2015, we recorded $4.9 million of pre-tax, non-cash charges related to impairment of property, plant and equipment. For the 2015 fiscal year, our total pre-tax, non-cash impairment was $47.9 million.
During fiscal year 2014, we recorded $4.3 million ($2.6 million after-tax) of charges related to the write down of inventory for the planned exit from the contract-based mobile phone business, the write-off of store fixtures associated with changing our product mix and the impairment of one store. We fully exited the contract-based mobile phone business in the first quarter of fiscal 2015.
There were no charges associated with our exit of the fitness equipment business, which took place in the third quarter of fiscal 2015.
Tax Valuation Allowance
During the three-month period ended March 31, 2015, we recorded an increase in our valuation allowance of $9.2 million. For the fiscal year 2015, we recorded $66.1 million of non-cash charges to establish a full valuation allowance on our deferred tax assets. This reduced the net deferred tax assets of the Company to zero.
We evaluate our deferred income tax assets and liabilities quarterly to determine whether or not a valuation allowance is necessary. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. A significant piece of negative evidence that we consider is cumulative losses in recent periods. Such evidence is a significant piece of objective negative evidence that is difficult to overcome. While the Company believes positive evidence exists with regard to the realizability of these deferred tax assets, it is not considered sufficient to outweigh the objectively verifiable negative evidence. The significant negative evidence of our losses generated before income taxes and the unfavorable shift in our business could not be overcome by considering other sources of taxable income in recent periods, which included tax planning strategies. The full valuation allowance will remain until there exists significant objective positive evidence, such as sustained achievement of cumulative profits.








Stock Repurchase Plan
During the three months ended March 31, 2015, the Company did not repurchase any shares. During the fiscal year ended March 31, 2015, the Company repurchased 0.8 million shares for $5.3 million at an average price of $6.32 per share. The shares were repurchased under the Company’s $40 million share repurchase program that was authorized by the Company’s Board of Directors on May 20, 2014 and expires on May 20, 2015. As of March 31, 2015, the Company had available approximately $34.7 million authorized to repurchase shares of common stock under the current share repurchase program.

Teleconference and Webcast
The Company will be conducting a conference call to discuss operating results for the three and 12 month periods ended March 31, 2015, on Friday, May 15, 2015 at 9:00 a.m. (Eastern Time). Our call will be hosted by Dennis May, our President and CEO, Robert Riesbeck, our CFO, and Andrew Giesler, our SVP of Finance.
Interested investors and other parties may listen to a simultaneous web cast of the conference call by logging onto our website at www.hhgregg.com. The on-line replay will be available for a limited time immediately following the call. The call can also be accessed live over the phone by dialing (877) 304-8963. Callers should reference the hhgregg earnings call.
Non-GAAP to GAAP Reconciliation
Attached is a reconciliation of non-GAAP measures used in this earnings release including gross profit to gross profit, as adjusted, net (loss) income to net (loss) income, as adjusted and diluted net (loss) income per share to diluted net (loss) income per share, as adjusted, and SG&A to SG&A, as adjusted. The Company has adjusted these measures in order to reflect the results of operations going forward by excluding the impact of certain charges related to establishing a valuation allowance for deferred tax assets, the exit of the contract-based mobile phone business, asset write-offs due to the product mix shift and fixed asset impairments. Definitions and reconciliations of non-GAAP financial measures that will be discussed on the hhgregg investor earnings call, including gross profit, as adjusted, net (loss) income, as adjusted, diluted net (loss) income per share, as adjusted, and SG&A, as adjusted, can be found at www.hhgregg.com on the investor relations page.
About hhgregg
hhgregg is an appliance, electronics and furniture retailer that is committed to providing customers with a truly differentiated purchase experience through superior customer service, knowledgeable sales associates and the highest quality product selections. Founded in 1955, hhgregg is a multi-regional retailer currently with 226 stores in 20 states that also offers market-leading global and local brands at value prices nationwide via hhgregg.com.
Forward Looking Statements
The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes forward-looking statements, including with respect to the Company’s financial performance, ability to manage costs, innovation in the video industry, the impact and amount of non-cash charges, and shifts in the Company’s sales mix. hhgregg has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While hhgregg believes these expectations, assumptions, estimates and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These and other important factors may cause hhgregg’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from hhgregg’s expectations are: the ability to successfully execute its strategies and initiatives, particularly in the sales mix shift and consumer electronics category; its ability to maintain a positive brand perception and recognition; the failure of manufacturers to introduce new products and technologies; competition in existing, adjacent and new metropolitan markets; its ability to maintain the security of customer, associate and Company information; its ability to roll out new financing offers to customers; its ability to effectively manage and monitor its operations, costs and service quality; its ability to maintain and upgrade its information technology systems; its ability to maintain and develop multi-channel sales and marketing strategies; competition from internet retailers; its ability to meet delivery schedules; the effect of general and regional economic and employment conditions on its net sales; its ability to attract and retain qualified sales personnel; its ability to meet financial performance guidance; its ability to generate sufficient cash flows to recover the fair value of long-lived assets and recognize deferred tax assets; its reliance on a small number of suppliers; its ability to negotiate with its suppliers to provide product on a timely basis at competitive prices; changes in legal and/or trade regulations, currency fluctuations and prevailing interest rates and the potential for litigation.

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this press release are more fully described in the “Risk Factors” section in the Company’s Annual Report on Form 10-K filed May 15, 2015.





Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. hhgregg does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any of these statements to reflect future events or developments.
 
 
 
Contact:
Andy Giesler, Senior Vice President of Finance
 
investorrelations@hhgregg.com
 
(317) 848-8710





HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND TWELVE MONTHS ENDED MARCH 31, 2015 AND 2014
(UNAUDITED)
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
March 31, 2015
 
March 31, 2014
 
March 31, 2015
 
March 31, 2014
 
 
(In thousands, except share and per share data)
Net sales
 
$
485,603

 
$
538,280

 
$
2,129,374

 
$
2,338,570

Cost of goods sold
 
346,651

 
385,736

 
1,523,536

 
1,674,031

Gross profit
 
138,952


152,544


605,838


664,539

Selling, general and administrative expenses
 
120,127

 
121,892

 
488,391

 
493,950

Net advertising expense
 
29,638

 
30,780

 
128,826

 
124,179

Depreciation and amortization expense
 
8,840

 
10,891

 
40,200

 
43,120

Asset impairment charges
 
4,882

 
303

 
47,869

 
613

(Loss) income from operations
 
(24,535
)
 
(11,322
)
 
(99,448
)
 
2,677

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense
 
678

 
609

 
2,600

 
2,465

Interest income
 
(9
)
 
(1
)
 
(63
)
 
(10
)
Total other expense
 
669

 
608

 
2,537

 
2,455

(Loss) income before income taxes
 
(25,204
)
 
(11,930
)
 
(101,985
)
 
222

Income tax expense (benefit)
 
24

 
(4,691
)
 
30,761

 
(6
)
Net (loss) income
 
$
(25,228
)
 
$
(7,239
)
 
$
(132,746
)
 
$
228

Net (loss) income per share
 
 
 
 
 
 
 
 
Basic
 
$
(0.91
)
 
$
(0.25
)
 
$
(4.72
)
 
$
0.01

Diluted
 
$
(0.91
)
 
$
(0.25
)
 
$
(4.72
)
 
$
0.01

Weighted average shares outstanding-basic
 
27,663,764

 
28,963,481

 
28,129,596

 
30,209,928

Weighted average shares outstanding-diluted
 
27,663,764

 
28,963,481

 
28,129,596

 
30,683,989






HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND TWELVE MONTHS ENDED MARCH 31, 2015 AND 2014
(AS A PERCENTAGE OF NET SALES)
(UNAUDITED)
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
March 31, 2015
 
March 31, 2014
 
March 31, 2015
 
March 31, 2014
Net sales
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
Cost of goods sold
 
71.4

 
71.7

 
71.5

 
71.6

Gross profit
 
28.6

 
28.3

 
28.5

 
28.4

Selling, general and administrative expenses
 
24.7

 
22.6

 
22.9

 
21.1

Net advertising expense
 
6.1

 
5.7

 
6.0

 
5.3

Depreciation and amortization expense
 
1.8

 
2.0

 
1.9

 
1.8

Asset impairment charges
 
1.0

 
0.1

 
2.2

 

(Loss) income from operations
 
(5.1
)
 
(2.1
)
 
(4.7
)
 
0.1

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense
 
0.1

 
0.1

 
0.1

 
0.1

Interest income
 

 

 

 

Total other expense
 
0.1

 
0.1

 
0.1

 
0.1

(Loss) income before income taxes
 
(5.2
)
 
(2.2
)
 
(4.8
)
 

Income tax expense(benefit)
 

 
(0.9
)
 
1.4

 

Net (loss) income
 
(5.2
)%
 
(1.3
)%
 
(6.2
)%
 
0.0
 %
Certain percentage amounts do not sum due to rounding





HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2015 AND 2014
(UNAUDITED)
 
 
 
2015
 
2014
 
 
(In thousands, except share data)
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash
 
$
30,401

 
$
48,164

Accounts receivable—trade, less allowances of $19 and $132, respectively
 
11,901

 
15,121

Accounts receivable—other
 
16,715

 
16,467

Merchandise inventories, net
 
257,469

 
298,542

Prepaid expenses and other current assets
 
6,581

 
6,694

Income tax receivable
 
5,326

 
1,380

Deferred income taxes
 

 
6,220

Total current assets
 
328,393

 
392,588

Net property and equipment
 
128,107

 
193,882

Deferred financing costs, net
 
1,796

 
2,334

Deferred income taxes
 
6,489

 
35,182

Other assets
 
2,844

 
1,977

Total long-term assets
 
139,236

 
233,375

Total assets
 
$
467,629

 
$
625,963

Liabilities and Stockholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
112,143

 
$
140,806

Customer deposits
 
48,742

 
41,518

Accrued liabilities
 
46,723

 
50,898

Deferred income taxes
 
6,489

 

Income tax payable
 

 
122

Total current liabilities
 
214,097

 
233,344

Long-term liabilities:
 
 
 
 
Deferred rent
 
67,935

 
73,493

Other long-term liabilities
 
12,009

 
11,992

Total long-term liabilities
 
79,944

 
85,485

Total liabilities
 
294,041

 
318,829

Stockholders’ equity:
 
 
 
 
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2015 and March 31, 2014, respectively
 

 

Common stock, par value $.0001; 150,000,000 shares authorized; 41,161,753 and 41,121,390 shares issued; and 27,665,071 and 28,460,218 outstanding as of March 31, 2015 and March 31, 2014, respectively
 
4

 
4

Additional paid-in capital
 
301,680

 
297,199

Retained earnings
 
22,132

 
154,878

Common stock held in treasury at cost, 13,496,682 and 12,661,172 shares as of March 31, 2015 and March 31, 2014, respectively
 
(150,228
)
 
(144,947
)
Total stockholders’ equity
 
173,588

 
307,134

Total liabilities and stockholders’ equity
 
$
467,629

 
$
625,963






HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2015 AND 2014
(UNAUDITED)
 
 
 
2015
 
2014
 
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
Net (loss) income
 
$
(132,746
)
 
$
228

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
40,200

 
43,120

Amortization of deferred financing costs
 
538

 
604

Stock-based compensation
 
4,623

 
4,428

Excess tax deficiency from stock based compensation
 

 
849

Loss on sales of property and equipment
 
252

 
1,646

Deferred income taxes
 
41,402

 
(392
)
Asset impairment charges
 
47,869

 
613

Tenant allowances received from landlords
 
986

 
2,705

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable—trade
 
3,220

 
9,150

Accounts receivable—other
 
384

 
2,407

Merchandise inventories
 
41,073

 
17,020

Income tax receivable
 
(3,946
)
 
(815
)
Prepaid expenses and other assets
 
(108
)
 
(1,066
)
Accounts payable
 
(26,882
)
 
6,125

Customer deposits
 
7,224

 
3,476

Income tax payable
 
(122
)
 
(2,023
)
Accrued liabilities
 
(4,317
)
 
1,476

Deferred rent
 
(7,176
)
 
(7,115
)
Other long-term liabilities
 
289

 
215

Net cash provided by operating activities
 
12,763

 
82,651

Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(22,522
)
 
(22,257
)
Proceeds from sales of property and equipment
 
45

 
217

Purchases of corporate-owned life insurance
 
(646
)
 
(684
)
Net cash used in investing activities
 
(23,123
)
 
(22,724
)
Cash flows from financing activities:
 
 
 
 
Purchases of treasury stock
 
(5,281
)
 
(49,145
)
Proceeds from exercise of stock options
 

 
5,814

Excess tax deficiency from stock-based compensation
 

 
(849
)
Net decrease in bank overdrafts
 

 
(11,506
)
Net repayments on inventory financing facility
 
(2,122
)
 
(3,723
)
Payment of financing costs
 

 
(946
)
Net cash used in financing activities
 
(7,403
)
 
(60,355
)
Net decrease in cash and cash equivalents
 
(17,763
)
 
(428
)
Cash and cash equivalents
 
 
 
 
Beginning of period
 
48,164

 
48,592

End of period
 
$
30,401

 
$
48,164

Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
 
$
2,085

 
$
1,881

Income taxes (received) paid
 
$
(6,411
)
 
$
3,418

Capital expenditures included in accounts payable
 
$
1,409

 
$
1,068









We believe that the non-GAAP measures described below provide meaningful information to assist shareholders in understanding our financial results and assessing our prospects for future performance. Management believes gross profit, as adjusted, adjusted net (loss) income, adjusted diluted net (loss) income per share, SG&A, as adjusted, EBITDA and Adjusted EBITDA are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management makes standard adjustments for items such as non-cash asset impairments and valuation allowance on deferred tax assets, as well as adjustments for other items that may arise during the period and have a meaningful impact on comparability.

The below information provides reconciliations from gross profit, net (loss) income, and SG&A expense, the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”), to non-GAAP financial measures. The Company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the earnings release. The non-GAAP financial measures in the accompanying earnings release may differ from similar measures used by other companies.


HHGREGG, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF GROSS PROFIT, AS ADJUSTED
(UNAUDITED)

 
 
Three Months Ended March 31,
 
Twelve Months Ended March 31,
(Amounts in thousands)
 
2015
 
2014
 
2015
 
2014
Gross profit as reported
 
$
138,952

 
$
152,544

 
$
605,838

 
$
664,539

Gross profit as % of net sales
 
28.6
%
 
28.3
%
 
28.5
%
 
28.4
%
Adjustments to gross profit:
 
 
 
 
 
 
 
 
Mobile inventory write-down
 

 
1,740

 

 
1,740

Gross profit, as adjusted
 
$
138,952

 
$
154,284

 
$
605,838

 
$
666,279

Gross profit as % of net sales, as adjusted
 
28.6
%
 
28.7
%
 
28.5
%
 
28.5
%
We have presented gross profit, as adjusted to exclude the impact of certain non-recurring charges related to the exit of the contract-based mobile phone business as we believe that these transactions do not reflect our core business. We also believe that gross profit, as adjusted provides a better year-over-year comparison and will be used by analysts, investors and other interested parties in the evaluation of our company to other companies in our industry. Gross profit, as adjusted is not a measure of performance under GAAP and should not be considered as a substitute for gross profit prepared in accordance with GAAP. Gross profit, as adjusted has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of gross profit as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using gross profit, as adjusted only as a supplement.






HHGREGG, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET (LOSS) INCOME, AS ADJUSTED AND
DILUTED NET (LOSS) INCOME PER SHARE, AS ADJUSTED
(UNAUDITED)
 
 
 
Three Months Ended March 31,

Twelve Months Ended March 31,
(Amounts in thousands, except share data)
 
2015

2014

2015

2014
Net (loss) income as reported
 
$
(25,228
)
 
$
(7,239
)
 
$
(132,746
)
 
$
228

Adjustments to net (loss) income:
 
 
 
 
 
 
 
 
Asset impairment charges
 
4,882

 
303

 
47,869

 
613

Valuation allowance for deferred tax assets
 
9,243

 

 
66,122

 

Mobile inventory write-down
 

 
1,740

 

 
1,740

Mobile fixed assets write-off
 

 
1,114

 

 
1,114

Product mix fixed assets write-off
 

 
831

 

 
831

Tax impact of adjustments to net (loss) income (1)
 
(1,953
)
 
(1,595
)
 
(18,761
)
 
(1,719
)
Net (loss) income, as adjusted
 
$
(13,056
)
 
$
(4,846
)
 
$
(37,516
)
 
$
2,807

Weighted average shares outstanding – Diluted
 
27,663,764

 
28,963,481

 
28,129,596

 
30,683,989

Diluted net (loss) income per share as reported
 
$
(0.91
)
 
$
(0.25
)
 
$
(4.72
)
 
$
0.01

Tax adjusted impact of above adjustments (1)
 
$
0.44

 
$
0.08

 
$
3.39

 
$
0.08

Diluted net (loss) income per share, as adjusted
 
$
(0.47
)
 
$
(0.17
)
 
$
(1.33
)
 
$
0.09

(1)
Amounts may not recalculate due to rounding.
We have presented net (loss) income, as adjusted and net (loss) income per diluted share, as adjusted to exclude the impact of certain non-recurring charges related to asset impairment charges, the valuation allowance for deferred tax assets, the exit of the contract-based mobile phone business and asset write-offs due to the product mix shift as we believe that these transactions do not reflect our core business. We also believe that net (loss) income, as adjusted and net (loss) income per diluted share, as adjusted provide better year-over-year comparisons and will be used by analysts, investors and other interested parties in the evaluation of our company to other companies in our industry. Net (loss) income, as adjusted and net (loss) income per diluted share, as adjusted are not measures of performance under GAAP and should not be considered as a substitute for net (loss) income or net (loss) income per diluted share prepared in accordance with GAAP. Net (loss) income, as adjusted and net (loss) income per diluted share, as adjusted, have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the our results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using net (loss) income, as adjusted, and net (loss) income per diluted share, as adjusted only as a supplement.

HHGREGG, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF SG&A EXPENSES, AS ADJUSTED
(UNAUDITED)

 
 
Three Months Ended March 31,
 
Twelve Months Ended March 31,
(Amounts in thousands)
 
2015
 
2014
 
2015
 
2014
SG&A expenses as reported
 
$
120,127

 
$
121,892

 
$
488,391

 
$
493,950

SG&A as % of net sales
 
24.7
%
 
22.6
%
 
22.9
%
 
21.1
%
Adjustments to SG&A expenses:
 
 
 
 
 
 
 
 
Mobile fixed assets write-off
 

 
1,114

 

 
1,114

Product mix fixed assets write-off
 

 
831

 

 
831

SG&A expenses, as adjusted
 
$
120,127

 
$
119,947

 
$
488,391

 
$
492,005

SG&A as % of net sales, as adjusted
 
24.7
%
 
22.3
%
 
22.9
%
 
21.0
%
We have presented SG&A expenses, as adjusted to exclude the impact of certain non-recurring charges related to the exit of the contract-based mobile phone business and asset write-offs due to the product mix shift as we believe that these transactions do not reflect our core business. We also believe that SG&A expenses, as adjusted provide a better year-over-year





comparison and will be used by analysts, investors and other interested parties in the evaluation of our company to other companies in our industry. SG&A expenses, as adjusted is not a measure of performance under GAAP and should not be considered as a substitute for SG&A expenses prepared in accordance with GAAP. SG&A expenses, as adjusted, has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using SG&A expenses, as adjusted only as a supplement.

 
HHGREGG, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
 
 
Three Months Ended March 31,
 
Twelve Months Ended March 31,
(Amounts in thousands)
 
2015
 
2014
 
2015
 
2014
Net (loss) income as reported
 
$
(25,228
)
 
$
(7,239
)
 
$
(132,746
)
 
$
228

Adjustments:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
8,840

 
10,891

 
40,200

 
43,120

Interest expense, net
 
669

 
608

 
2,537

 
2,455

Income tax expense
 
24

 
(4,691
)
 
30,761

 
(6
)
EBITDA
 
$
(15,695
)
 
$
(431
)
 
$
(59,248
)
 
$
45,797

 
 
 
 
 
 
 
 
 
Non-cash asset impairment charges
 
4,882

 
303

 
47,869

 
613

Mobile inventory write-down
 
$

 
$
1,740

 
$

 
$
1,740

Mobile fixed assets write-off
 
$

 
$
1,114

 
$

 
$
1,114

Product mix fixed assets write-off
 
$

 
$
831

 
$

 
$
831

Adjusted EBITDA
 
$
(10,813
)
 
$
3,557

 
$
(11,379
)
 
$
50,095


EBITDA represents net (loss) income before income tax expense, interest income, interest expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA, without giving effect to asset impairment charges, the exit of the contract-based mobile phone business and asset write-offs due to the product mix shift. We have presented Adjusted EBITDA because we believe that the exclusion of these non-recurring items are necessary to provide the most accurate and consistent measure of our core operating results and as a means to analyze period-to-period changes in operating results.We have presented EBITDA and Adjusted EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. Management uses EBITDA and Adjusted EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. EBITDA and Adjusted EBITDA are not a measure of performance under generally accepted accounting principles (GAAP) and should not be considered as a substitute for net (loss) income prepared in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you should not consider these in isolation or as a substitute for analysis of our results as reported under GAAP.

Some of the limitations of EBITDA and Adjusted EBITDA measures are:
 
EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
EBITDA and Adjusted EBITDA do not reflect interest expense or the cash requirements necessary to service interest payments on our debt;
EBITDA and Adjusted EBITDA do not reflect tax expense or the cash requirements necessary to pay for tax obligations; and
Although depreciation and amortization are non-cash charges, the asset being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
Although asset impairment charges are non-cash, the asset being impaired will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only as a supplement.












HHGREGG, INC. AND SUBSIDIARIES
Store Count by Quarter for Fiscal Years 2013, 2014 and 2015
(Unaudited)
 
 
 
FY2013
 
FY2014
 
FY2015
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
Beginning Store Count
 
208

 
210

 
223

 
228

 
228

 
228

 
228

 
228

 
228

 
229

 
228

 
228

Store Openings
 
2

 
13

 
5

 

 

 

 

 

 
1

 

 

 

Store Closures
 

 

 

 

 

 

 

 

 

 
(1
)
 

 

Ending Store Count
 
210

 
223

 
228

 
228

 
228

 
228

 
228

 
228

 
229

 
228

 
228

 
228

Note: hhgregg, Inc.’s fiscal year is comprised of four quarters ending June 30th, September 30th, December 31st and March 31st.




HHGREGG (CE) (USOTC:HGGGQ)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more HHGREGG (CE) Charts.
HHGREGG (CE) (USOTC:HGGGQ)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more HHGREGG (CE) Charts.