EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Bluestem Group Inc. ("Bluestem Group" or the "Company") (OTCMKTS: BGRP) today reported unaudited consolidated financial results that include its wholly-owned subsidiary, Bluestem Brands, Inc. and its subsidiaries (“Bluestem”), for the 14-weeks ended February 3, 2017 and the 13-weeks ended January 29, 2016 and audited consolidated financial results for the 53-weeks ended February 3, 2017 and the 52-weeks ended January 29, 2016. We refer to the 14- and 13-week periods in this release as the "fourth quarter" and the 53- and 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 the boomer and senior demographic, generally considered age 50 and over, and low- to middle-income consumers across all age demographics.
“Our fourth quarter results reflect continued performance issues in our Northstar credit portfolio and soft retail demand in our Orchard Portfolio. In response to these headwinds, we’ve executed, and continue to execute, several actions focused on maintaining covenant compliance and establishing a foundation for future growth. I look forward to sharing more details about our turnaround plan when we host our fourth quarter earnings call tomorrow,” said Steve Nave, Bluestem Group’s President and Chief Executive Officer.
Fourth Quarter Fiscal 2016 Bluestem Group Consolidated Highlights
- Net loss for the fourth quarter of fiscal 2016 was $310.2 million compared to net income of $8.2 million for the fourth quarter of fiscal 2015. Basic and diluted loss per share was $2.36 for the fourth quarter of fiscal 2016 compared to diluted income per share of $0.06 for the fourth quarter of fiscal 2015.
- The Company recorded a $354.4 million non-cash intangible asset and goodwill impairment charge during the fourth quarter primarily related to the Fingerhut tradename, customer relationship and goodwill intangible assets as a result of an increased supply of subprime credit to our customer base, which has negatively impacted net sales, customer retention, new customer acquisition and lower credit portfolio performance.
- Adjusted EBITDA for the fourth quarter of fiscal 2016 was $66.2 million compared to adjusted EBITDA of $80.6 million for the fourth quarter of fiscal 2015.
- Capmark Portfolio asset proceeds for the fourth quarter of fiscal 2016 were $38.7 million. At the end of the fourth quarter of fiscal 2016, the Company had $23.0 million in net Capmark Portfolio assets remaining versus $53.7 million at the end of the third quarter of fiscal 2016.
- Cash and cash equivalents were $212.9 million as of February 3, 2017. Subsequent to fiscal 2016, the special dividend of $80.2 million was paid.
Fourth Quarter Fiscal 2016 Bluestem Brands Stand-Alone Highlights
- Net sales for the fourth quarter of fiscal 2016 were $750.3 million, a 1.7% increase compared to net sales of $737.7 million for the fourth quarter of fiscal 2015.
- Net loss for the fourth quarter of fiscal 2016 was $304.9 million compared to net loss of $6.8 million for the fourth quarter of fiscal 2015. The increased net loss primarily resulted from non-cash impairment charges to the Fingerhut tradename, customer relationship and goodwill intangible assets.
- Bluestem’s adjusted EBITDA for the fourth quarter of fiscal 2016 was $60.4 million compared to adjusted EBITDA of $76.4 million for the fourth quarter of fiscal 2015.
- Northstar Portfolio net sales for the fourth quarter of fiscal 2016 were $450.0 million, a decrease of 0.5% compared to $452.2 million for the fourth quarter of fiscal 2015.
- Orchard Portfolio’s net sales for the fourth quarter of fiscal 2016 were $250.2 million, an increase of 4.5% compared to $239.5 million for the fourth quarter of fiscal 2015.
- Northstar Portfolio active accounts were 1.6 million as of the end of the fourth quarter of fiscal 2016, a decrease of 5.5% compared to 1.7 million as of the end of the fourth quarter of fiscal 2015.
- Orchard Portfolio’s active customers were 7.5 million as of the end of the fourth quarter of fiscal 2016, a decrease of 4.4% compared to 7.8 million as of the end of the fourth quarter of fiscal 2015.
- 30+ day delinquent balances on the Northstar Portfolio revolving portfolio were 16.1% at the end of the fourth quarter of fiscal 2016 compared to 14.7% for the fourth quarter of fiscal 2015.
- Net principal charge-off rate on the revolving portfolio was 20.2% for the fourth quarter of fiscal 2016 compared to 17.8% for the fourth quarter of fiscal 2015.
All financial information included in this release is unaudited. Information for Bluestem Group is presented on a consolidated basis, including 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.
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 In-person Meeting and Teleconference Information
The
Company will host an in-person meeting at the offices of Akin Gump
Strauss Hauer & Feld LLP, One Bryant Park, Bank of America Tower in New
York City at 9:00 AM ET on April 27, 2017. The meeting can also be
accessed via conference call at (888) 230-5549 or (913) 312-0683
(International), conference ID #9702451 and 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 (844) 512-2921 or (412) 317-6671 (International), replay
pin #9702451. The telephone replay will be available at 12:00PM ET April
27, 2017. 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 national,
multi-brand, online retailer of a broad selection of name-brand and
private label general merchandise serving the boomer and senior
demographic, generally considered age 50 and over, and low- to
middle-income consumers over all age demographics through 15 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, 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 February 3, 2017 and January 29, 2016.
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
14- and 53-weeks ended February 3, 2017 and 13-
and 52-weeks ended January 29, 2016
Overview and Basis of Presentation
As used in this release:
- “Bluestem Group,” “we,” “us,” “our,” or “the Company” refers to Bluestem Group Inc. with its consolidated subsidiaries
- “Bluestem” refers to Bluestem Brands, Inc., an indirect subsidiary of Bluestem Group Inc., which consists of the Northstar Portfolio of retail brands, the Orchard Portfolio of retail brands and PayCheck Direct
- "Northstar Portfolio” refers to the consolidated Fingerhut and Gettington retail brands
- “Orchard Portfolio” refers to the consolidated Appleseed’s, Bedford Fair, Blair, Draper’s & Damon’s, Gold Violin, Haband, LinenSource, Norm Thompson, Old Pueblo Traders, Sahalie, Solutions (which was discontinued in the fourth quarter of fiscal 2016), Tog Shop, and WinterSilks retail brands
- “Capmark Portfolio” refers to the commercial real estate finance operations of Bluestem Group Inc.
The accompanying financial information for Bluestem Group Inc. is presented on a consolidated basis, including Bluestem Brands, Inc. and its consolidated subsidiaries, which includes Orchard Brands Corporation 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. All financial information included in this release is unaudited.
The Company reviews and presents the consolidated business results based on the organizational structure management uses to evaluate performance and make decisions on allocating resources and assessing performance. The consolidated business results are presented in five categories: Northstar Portfolio, Orchard Portfolio, PayCheck Direct, Capmark Portfolio and we assign certain revenues and costs to "Corporate".
Financial Information
To supplement
the historical financial data derived from Bluestem Group’s and
Bluestem’s consolidated financial statements, which are prepared in
accordance with U.S. Generally Accepted Accounting Principles ("GAAP"),
this release uses adjusted EBITDA as a non-GAAP performance measure. In
addition, Bluestem’s stand-alone consolidated financial statements
includes contribution margin, adjusted general and administrative
expenses, free cash flow, program agreement adjusted EBITDA, lender
adjusted EBITDA, leverage ratio debt, program agreement leverage ratio,
lender leverage ratio, working capital, adjusted working capital,
program agreement net liquidity and lender net liquidity 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 and Bluestem’s results for
further important information concerning these measures.
Program Agreement
Bluestem is a party
to an agreement with WebBank and Santander Consumer USA Inc. ("SCUSA")
("Program Agreement") which includes a series of transactions related to
revolving Northstar Portfolio customer accounts receivables. The Company
markets revolving credit accounts and installment credit accounts to
qualifying customers. WebBank extends credit directly to Northstar
Portfolio customers. The credit accounts may only be used to purchase
goods and services from Northstar Portfolio, and certain third parties
that market their goods and services to Northstar Portfolio customers.
The Company is obligated to purchase and assume ownership of the
receivables after a contractual holding period by WebBank. The purchase
price of the receivables from WebBank is at par value, and the Company
pays applicable fees along with applicable customer finance charges
earned by WebBank during the contractual hold period. SCUSA is obligated
to reimburse Bluestem for origination and other product fees.
Bluestem Group Inc.
Results for the 14- and 53-weeks
ended February 3, 2017
|
BLUESTEM GROUP INC. Consolidated Statements of Comprehensive Income (unaudited - in thousands, except shares and per share amounts) |
|||||||||||||||||||||||||
| Fiscal Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | ||||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | ||||||||||||||||||||||
| Net sales and revenue | |||||||||||||||||||||||||
| Net sales | $ | 750,327 | $ | 737,682 | $ | 2,092,030 | $ | 1,720,189 | |||||||||||||||||
| Commercial real estate revenue | 7,808 | 6,767 | 8,566 | 22,852 | |||||||||||||||||||||
| Total net sales and revenue | 758,135 | 744,449 | 2,100,596 | 1,743,041 | |||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||||
| Cost of goods sold | 428,014 | 403,947 | 1,130,352 | 937,841 | |||||||||||||||||||||
| Sales and marketing expenses | 148,078 | 166,657 | 542,380 | 412,234 | |||||||||||||||||||||
| Net credit expense | 86,701 | 32,784 | 146,420 | 64,035 | |||||||||||||||||||||
| General and administrative expenses | 53,499 | 65,525 | 226,254 | 213,844 | |||||||||||||||||||||
| Amortization and depreciation not included in cost of goods sold | 45,297 | 32,963 | 97,135 | 78,183 | |||||||||||||||||||||
| Loss on impairment | 354,432 | 20,200 | 354,862 | 20,200 | |||||||||||||||||||||
| Loss (gain) on derivatives in our own equity | — | 6,489 | (548 | ) | 183 | ||||||||||||||||||||
| Gain on debt extinguishment | — | — | (2,509 | ) | — | ||||||||||||||||||||
| Total costs and expenses | 1,116,021 | 728,565 | 2,494,346 | 1,726,520 | |||||||||||||||||||||
| Operating (loss) income | (357,886 | ) | 15,884 | (393,750 | ) | 16,521 | |||||||||||||||||||
| Interest expense, net | 13,611 | 13,701 | 54,005 | 43,920 | |||||||||||||||||||||
| (Loss) income before income taxes | (371,497 | ) | 2,183 | (447,755 | ) | (27,399 | ) | ||||||||||||||||||
| Income tax benefit | (61,262 | ) | (6,065 | ) | (60,043 | ) | (41,614 | ) | |||||||||||||||||
| Net (loss) income | $ | (310,235 | ) | $ | 8,248 | $ | (387,712 | ) | $ | 14,215 | |||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||||||||||
| Unrealized gain on interest rate swap, net of tax | 1,131 | — | 621 | — | |||||||||||||||||||||
| Net change in unrealized gains/losses on investments securities, net of tax | — | (638 | ) | (231 | ) | (633 | ) | ||||||||||||||||||
| Comprehensive (loss) income | $ | (309,104 | ) | $ | 7,610 | $ | (387,322 | ) | $ | 13,582 | |||||||||||||||
| Basic and diluted (loss) income per share - common stockholders | |||||||||||||||||||||||||
| Basic and diluted (loss) income per share | $ | (2.36 | ) | $ | 0.06 | $ | (2.92 | ) | $ | 0.10 | |||||||||||||||
| Basic weighted average shares outstanding | 132,036,278 | 136,382,570 | 132,880,118 | 136,202,218 | |||||||||||||||||||||
| Diluted weighted average shares outstanding | 132,036,278 | 137,824,323 | 132,880,118 | 137,748,265 | |||||||||||||||||||||
|
BLUESTEM GROUP INC. Consolidated Balance Sheets (unaudited - in thousands) |
|||||||||||||
| February 3, 2017 | January 29, 2016 | ||||||||||||
| ASSETS | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 212,942 | $ | 185,944 | |||||||||
| Restricted cash | 15,797 | 22,569 | |||||||||||
| Customer accounts receivable, net of allowance of $17,041 and $14,434 | 50,053 | 44,446 | |||||||||||
| Merchandise inventories | 229,970 | 263,579 | |||||||||||
| Promotional material inventories | 49,730 | 53,253 | |||||||||||
| Other current assets | 39,135 | 49,233 | |||||||||||
| Total current assets | 597,627 | 619,024 | |||||||||||
| Property and equipment, net | 130,065 | 125,001 | |||||||||||
| Intangibles, net | 208,563 | 460,551 | |||||||||||
| Goodwill | 202,556 | 367,481 | |||||||||||
| Other assets | 41,926 | 85,785 | |||||||||||
| Total Assets | $ | 1,180,737 | $ | 1,657,842 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 221,539 | $ | 180,601 | |||||||||
| Accrued costs and other liabilities | 154,095 | 129,361 | |||||||||||
| Short-term debt | 47,500 | 47,981 | |||||||||||
| Total current liabilities | 423,134 | 357,943 | |||||||||||
| Long-term debt | 468,924 | 513,847 | |||||||||||
| Deferred income taxes | 37,474 | 98,275 | |||||||||||
| Other long-term liabilities | 37,470 | 14,531 | |||||||||||
| Total liabilities | 967,002 | 984,596 | |||||||||||
| Stockholders' Equity: | |||||||||||||
| Series A participating convertible preferred stock | 5,000 | 4,970 | |||||||||||
| Common stock | 1,323 | 1,366 | |||||||||||
| Treasury stock | (131 | ) | (131 | ) | |||||||||
| Additional paid-in capital | 289,789 | 361,935 | |||||||||||
| Retained earnings | (82,867 | ) | 304,875 | ||||||||||
| Accumulated other comprehensive income, net of tax | 621 | 231 | |||||||||||
| Total stockholders’ equity | 213,735 | 673,246 | |||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,180,737 | $ | 1,657,842 | |||||||||
|
BLUESTEM GROUP INC. Consolidated Statements of Cash Flows (unaudited - in thousands) |
|||||||||||||
| Fiscal Years Ended | |||||||||||||
| February 3, 2017 | January 29, 2016 | ||||||||||||
| (53-weeks) | (52-weeks) | ||||||||||||
| Operating Activities | |||||||||||||
| Net (loss) income | $ | (387,712 | ) | $ | 14,215 | ||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||||
| Amortization and depreciation expense | 101,606 | 81,127 | |||||||||||
| Loss on impairment | 354,862 | 20,200 | |||||||||||
| Provision for doubtful accounts | 78,592 | 31,204 | |||||||||||
| Provision for deferred income taxes | (60,801 | ) | (39,199 | ) | |||||||||
| Loss on servicing right | 22,323 | — | |||||||||||
| Net gains on loans held for sale, investment securities and other | (2,690 | ) | (10,773 | ) | |||||||||
| Gain on debt extinguishment | (2,509 | ) | — | ||||||||||
| Stock-based compensation expense | 5,310 | 5,393 | |||||||||||
| Other, net | (250 | ) | (3,046 | ) | |||||||||
| Net change in assets and liabilities: | |||||||||||||
| Customer account receivables | (29,673 | ) | (42,810 | ) | |||||||||
| Merchandise inventories | 33,609 | (39,893 | ) | ||||||||||
| Promotional material inventories | 3,523 | (8,693 | ) | ||||||||||
| Other assets | 20,878 | 21,996 | |||||||||||
| Accounts payable and other liabilities | 4,395 | 4,512 | |||||||||||
| Payments from loans held for sale | 3,809 | 60,940 | |||||||||||
| Net cash provided by operating activities | 145,272 | 95,173 | |||||||||||
| Investing Activities | |||||||||||||
| Purchases of customer accounts receivable | (1,140,370 | ) | (1,197,537 | ) | |||||||||
| Proceeds from sale of customer accounts receivable | 1,085,844 | 1,198,146 | |||||||||||
| Acquisitions, net of cash on hand | — | (375,313 | ) | ||||||||||
| Net purchases of property and equipment | (43,383 | ) | (35,935 | ) | |||||||||
| Distributions from equity investments | 36,732 | 75,009 | |||||||||||
| Net decrease (increase) in restricted cash | 6,772 | (8,983 | ) | ||||||||||
| Other | (565 | ) | 722 | ||||||||||
| Net cash used in investing activities | (54,970 | ) | (343,891 | ) | |||||||||
| Financing Activities | |||||||||||||
| Borrowings of debt | — | 269,246 | |||||||||||
| Repayments of debt | (30,048 | ) | (100,782 | ) | |||||||||
| Extinguishment of debt | (18,150 | ) | — | ||||||||||
| Borrowings on asset backed line of credit | 840,760 | 481,712 | |||||||||||
| Repayments on asset backed line of credit | (843,330 | ) | (469,425 | ) | |||||||||
| Payments for the repurchase of common stock | (12,554 | ) | — | ||||||||||
| Treasury shares repurchased | — | (131 | ) | ||||||||||
| Net cash (used in) provided by financing activities | (63,322 | ) | 180,620 | ||||||||||
| Effect of Foreign Exchange Rates on Cash | 18 | (165 | ) | ||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 26,998 | (68,263 | ) | ||||||||||
| Cash and Cash Equivalents, Beginning of Period | 185,944 | 254,207 | |||||||||||
| Cash and Cash Equivalents, End of Period | $ | 212,942 | $ | 185,944 | |||||||||
BLUESTEM GROUP INC.
Non-GAAP Financial Measure
(unaudited
- in thousands)
To supplement the consolidated financial statements of Bluestem Group Inc. and its subsidiaries, which are presented in accordance with GAAP, we use the following measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP ("non-GAAP measure"):
Adjusted EBITDA, as presented, represents net (loss) income attributable to Bluestem Group Inc. before income tax benefit, interest expense, amortization and depreciation expense, loss on impairment, loss on servicing right, stock-based compensation expense, loss (gain) from derivatives in our own equity, gain on debt extinguishment, acquisition transaction costs, integration costs and other.
We provide this measure because we believe it is useful to investors in evaluating our operating performance compared to other companies in our industry. As a non-GAAP measure, it has limitations in that it does not reflect all of the amounts associated with Bluestem Group Inc.'s results of operations as determined in accordance with GAAP and is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure 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 calculation of Adjusted EBITDA may not be comparable to the calculation of such measure by other companies.
The following table reconciles Adjusted EBITDA from the nearest GAAP performance measure, which is net (loss) income:
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | |||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | |||||||||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||||||
| Net (loss) income | $ | (310,235 | ) | $ | 8,248 | $ | (387,712 | ) | $ | 14,215 | ||||||||||||||
| Income tax benefit | (61,262 | ) | (6,065 | ) | (60,043 | ) | (41,614 | ) | ||||||||||||||||
| Interest expense | 13,628 | 13,704 | 54,023 | 43,927 | ||||||||||||||||||||
| Amortization and depreciation expense | 46,465 | 34,066 | 101,606 | 81,127 | ||||||||||||||||||||
| Loss on impairment | 354,432 | 20,200 | 354,862 | 20,200 | ||||||||||||||||||||
| Loss on servicing right | 22,323 | — | 22,323 | — | ||||||||||||||||||||
| Stock-based compensation expense | 1,132 | 1,360 | 5,310 | 5,393 | ||||||||||||||||||||
| Loss (gain) on derivatives in our own equity | — | 6,489 | (548 | ) | 183 | |||||||||||||||||||
| Gain on debt extinguishment | — | — | (2,509 | ) | — | |||||||||||||||||||
| Acquisition transaction costs | — | — | — | 8,342 | ||||||||||||||||||||
| Integration costs | 1,669 | 2,635 | 5,590 | 5,607 | ||||||||||||||||||||
| Other | (1,955 | ) | — | (515 | ) | — | ||||||||||||||||||
| Adjusted EBITDA | $ | 66,197 | $ | 80,637 | $ | 92,387 | $ | 137,380 | ||||||||||||||||
Bluestem Brands, Inc.
Results for the 14- and 53-weeks
ended February 3, 2017
|
BLUESTEM BRANDS, INC. Consolidated Statements of Comprehensive Income and Selected Operating Data (unaudited - in thousands) |
|||||||||||||||||||
| Fiscal Quarters Ended | |||||||||||||||||||
| February 3, 2017 | January 29, 2016 | ||||||||||||||||||
| (14-weeks) | (13-weeks) |
Change(a) |
|
||||||||||||||||
| Net sales | $ | 750,327 | $ | 737,682 | 1.7 | % | |||||||||||||
| Cost of goods sold | 428,014 | 403,947 | 6.0 | % | |||||||||||||||
| Gross profit | 322,313 | 333,735 | (3.4 | )% | |||||||||||||||
| Sales and marketing expenses | 148,078 | 166,657 | (11.1 | )% | |||||||||||||||
| Net credit expense | 86,701 | 32,784 | 164.5 | % | |||||||||||||||
| General and administrative expenses | 51,930 | 63,272 | (17.9 | )% | |||||||||||||||
| Amortization and depreciation not included in cost of goods sold (b) | 45,297 | 32,963 | 37.4 | % | |||||||||||||||
| Loss on impairment | 354,432 | 20,200 | 1,654.6 | % | |||||||||||||||
| Gain on debt extinguishment | (3,456 | ) | — | n/m | |||||||||||||||
| Interest expense, net (c) | 14,141 | 13,701 | 3.2 | % | |||||||||||||||
| (Loss) income before income taxes | (374,810 | ) | 4,158 | n/m | |||||||||||||||
| Income tax (benefit) expense | (69,872 | ) | 10,971 | n/m | |||||||||||||||
| Net loss | $ | (304,938 | ) | $ | (6,813 | ) | 4,375.8 | % | |||||||||||
| Margins and Expenses as a Percentage of Net Sales: | |||||||||||||||||||
| Gross profit | 43.0 | % | 45.2 | % | (220 | ) | bps | ||||||||||||
| Sales and marketing expenses | 19.7 | % | 22.6 | % | (290 | ) | bps | ||||||||||||
| Net credit expense | 11.6 | % | 4.4 | % | 720 | bps | |||||||||||||
| Contribution margin (d) | $ | 87,534 | $ | 134,294 | (34.8 | )% | |||||||||||||
| As a percentage of net sales | 11.7 | % | 18.2 | % | (650 | ) | bps | ||||||||||||
| Adjusted general and administrative expenses (d) | $ | 50,738 | $ | 59,136 | (14.2 | )% | |||||||||||||
| As a percentage of net sales | 6.8 | % | 8.0 | % | (120 | ) | bps | ||||||||||||
| Adjusted EBITDA (d) | $ | 60,432 | $ | 76,391 | (20.9 | )% | |||||||||||||
| As a percentage of net sales | 8.1 | % | 10.4 | % | (230 | ) | bps | ||||||||||||
| Selected Financial Data: | |||||||||||||||||||
| Lender net liquidity (d) | $ | 104,403 | $ | 118,341 | (11.8 | )% | |||||||||||||
| Availability on inventory line of credit | $ | 100,237 | $ | 115,392 | (13.1 | )% | |||||||||||||
| Free cash flow (d) | $ | 57,608 | $ | 69,710 | (17.4 | )% | |||||||||||||
| Lender leverage ratio (d) | 3.51 | 3.34 | 5.1 | % | |||||||||||||||
| Program agreement leverage ratio (d) | 4.07 | 3.34 | 21.9 | % | |||||||||||||||
| Selected Operating Data: | |||||||||||||||||||
| Northstar Portfolio revolving new customer credit accounts (e) | 223 | 266 | (16.2 | )% | |||||||||||||||
| Fingerhut FreshStart new customer credit accounts (e) | 103 | 93 | 10.8 | % | |||||||||||||||
| PayCheck Direct new customer credit accounts (e) | 28 | 25 | 12.0 | % | |||||||||||||||
| Orchard Portfolio new gross customers (f) | 634 | 686 | (7.6 | )% | |||||||||||||||
| Northstar Portfolio active accounts (g) | 1,590 | 1,683 | (5.5 | )% | |||||||||||||||
| Orchard Portfolio active customers (h) | 7,498 | 7,845 | (4.4 | )% | |||||||||||||||
| PayCheck Direct eligible client employees (i) | 7,833 | 6,323 | 23.9 | % | |||||||||||||||
(a) Changes in rates are presented as the basis point ("bps") increase
(decrease) from the prior period.
(b) Consists of amortization
expense of customer relationship finite-lived intangible assets.
Depreciation expense related to software, owned fulfillment facilities
and equipment in Bluestem's fulfillment facilities are included in cost
of goods sold.
(c) Interest expense is 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) 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.
(f) Customers who have made a first time purchase
from a particular brand within the Orchard Portfolio during the period
presented.
(g) 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.
(h) Customers that
have made at least one purchase within the previous twelve fiscal months.
(i)
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.
| Fiscal Years Ended | ||||||||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||||||||
| (53-weeks) | (52-weeks) |
Change(a) |
||||||||||||||||
| Net sales | $ | 2,092,030 | $ | 1,720,189 | 21.6 | % | ||||||||||||
| Cost of goods sold | 1,130,352 | 937,841 | 20.5 | % | ||||||||||||||
| Gross profit | 961,678 | 782,348 | 22.9 | % | ||||||||||||||
| Sales and marketing expenses | 542,380 | 412,234 | 31.6 | % | ||||||||||||||
| Net credit expense | 146,420 | 64,035 | 128.7 | % | ||||||||||||||
| General and administrative expenses | 219,859 | 200,276 | 9.8 | % | ||||||||||||||
| Amortization and depreciation not included in cost of goods sold (b) | 97,135 | 78,183 | 24.2 | % | ||||||||||||||
| Loss on impairment | 354,862 | 20,200 | 1,656.7 | % | ||||||||||||||
| Gain on debt extinguishment | (3,456 | ) | — | n/m | ||||||||||||||
| Interest expense, net (c) | 54,778 | 43,920 | 24.7 | % | ||||||||||||||
| Loss before income taxes | (450,300 | ) | (36,500 | ) | 1,133.7 | % | ||||||||||||
| Income tax benefit | (97,829 | ) | (10,191 | ) | 860.0 | % | ||||||||||||
| Net loss | $ | (352,471 | ) | $ | (26,309 | ) | 1,239.7 | % | ||||||||||
| Margins and Expenses as a Percentage of Net Sales: | ||||||||||||||||||
| Gross profit | 46.0 | % | 45.5 | % | 50 | bps | ||||||||||||
| Sales and marketing expenses | 25.9 | % | 24.0 | % | 190 | bps | ||||||||||||
| Net credit expense | 7.0 | % | 3.7 | % | 330 | bps | ||||||||||||
| Contribution margin (d) | $ | 272,878 | $ | 306,079 | (10.8 | )% | ||||||||||||
| As a percentage of net sales | 13.0 | % | 17.8 | % | (480 | ) | bps | |||||||||||
| Adjusted general and administrative expenses (d) | $ | 209,335 | $ | 178,702 | 17.1 | % | ||||||||||||
| As a percentage of net sales | 10.0 | % | 10.4 | % | (40 | ) | bps | |||||||||||
| Adjusted EBITDA (d) | $ | 90,864 | $ | 130,825 | (30.5 | )% | ||||||||||||
| As a percentage of net sales | 4.3 | % | 7.6 | % | (330 | ) | bps | |||||||||||
| Selected Financial Data: | ||||||||||||||||||
| Lender net liquidity (d) | $ | 104,403 | $ | 118,341 | (11.8 | )% | ||||||||||||
| Availability on inventory line of credit | $ | 100,237 | $ | 115,392 | (13.1 | )% | ||||||||||||
| Free cash flow (d) | $ | 71,640 | $ | 112,568 | (36.4 | )% | ||||||||||||
| Lender leverage ratio (d) | 3.51 | 3.34 | 5.1 | % | ||||||||||||||
| Program agreement leverage ratio (d) | 4.07 | 3.34 | 21.9 | % | ||||||||||||||
| Selected Operating Data: | ||||||||||||||||||
| Northstar Portfolio revolving new customer credit accounts (e) | 618 | 728 | (15.1 | )% | ||||||||||||||
| Fingerhut FreshStart new customer credit accounts (e) | 250 | 258 | (3.1 | )% | ||||||||||||||
| PayCheck Direct new customer credit accounts (e) | 64 | 51 | 25.5 | % | ||||||||||||||
| Orchard Portfolio new gross customers (f) | 2,478 | 1,532 | 61.7 | % | ||||||||||||||
| Northstar Portfolio active accounts (g) | 1,590 | 1,683 | (5.5 | )% | ||||||||||||||
| Orchard Portfolio active customers (h) | 7,498 | 7,845 | (4.4 | )% | ||||||||||||||
| PayCheck Direct eligible client employees (i) | 7,833 | 6,323 | 23.9 | % | ||||||||||||||
(a) Changes in rates are presented as the basis point ("bps") increase
(decrease) from the prior period.
(b) Consists of amortization
expense of customer relationship finite-lived intangible assets.
Depreciation expense related to software, owned fulfillment facilities
and equipment in Bluestem's fulfillment facilities are included in cost
of goods sold.
(c) Interest expense is 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) 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.
(f) Customers who have made a first time purchase
from a particular brand within the Orchard Portfolio during the period
presented.
(g) 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.
(h) Customers that
have made at least one purchase within the previous twelve fiscal months.
(i)
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 Balance Sheets (unaudited - in thousands) |
||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 7,916 | $ | 11,870 | ||||||||
| Restricted cash | 15,713 | 22,485 | ||||||||||
| Customer accounts receivable, net of allowance of $17,041 and $14,434 | 50,053 | 44,446 | ||||||||||
| Merchandise inventories | 229,970 | 263,579 | ||||||||||
| Promotional material inventories | 49,730 | 53,253 | ||||||||||
| Prepaid expenses and other assets | 27,896 | 32,647 | ||||||||||
| Total current assets | 381,278 | 428,280 | ||||||||||
| Property and equipment, net | 130,065 | 125,001 | ||||||||||
| Intangible assets, net | 208,563 | 460,551 | ||||||||||
| Goodwill | 202,556 | 367,481 | ||||||||||
| Other assets | 3,514 | 3,405 | ||||||||||
| Total Assets | $ | 925,976 | $ | 1,384,718 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 221,539 | $ | 180,601 | ||||||||
| Current income taxes payable | 34,059 | 34,583 | ||||||||||
| Accrued costs and other liabilities | 83,055 | 111,613 | ||||||||||
| Short-term debt | 47,500 | 47,981 | ||||||||||
| Total current liabilities | 386,153 | 374,778 | ||||||||||
| Long-term debt | 445,736 | 490,032 | ||||||||||
| Deferred income taxes | 56,758 | 154,428 | ||||||||||
| Other long-term liabilities | 29,870 | 6,171 | ||||||||||
| Total liabilities | 918,517 | 1,025,409 | ||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock | — | — | ||||||||||
| Additional paid-in capital | 369,602 | 369,602 | ||||||||||
| Retained earnings | (362,764 | ) | (10,293 | ) | ||||||||
| Accumulated other comprehensive loss, net of tax | 621 | — | ||||||||||
| Total stockholders' equity | 7,459 | 359,309 | ||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 925,976 | $ | 1,384,718 | ||||||||
|
BLUESTEM BRANDS, INC. Consolidated Statements of Cash Flows (unaudited - in thousands) |
||||||||||||
| Fiscal Years Ended | ||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||
| (53-weeks) | (52-weeks) | |||||||||||
| Operating Activities | ||||||||||||
| Net loss | $ | (352,471 | ) | $ | (26,309 | ) | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
| Amortization and depreciation expense | 101,606 | 81,127 | ||||||||||
| Loss on impairment | 354,862 | 20,200 | ||||||||||
| Provision for doubtful accounts | 78,592 | 31,204 | ||||||||||
| Provision for deferred income taxes | (97,670 | ) | (28,346 | ) | ||||||||
| Loss on servicing right | 22,323 | — | ||||||||||
| Gain on debt extinguishment | (3,456 | ) | — | |||||||||
| Stock-based compensation expense | 4,946 | 4,106 | ||||||||||
| Other, net | 5,731 | 5,129 | ||||||||||
| Net change in assets and liabilities: | ||||||||||||
| Customer accounts receivable | (29,673 | ) | (42,810 | ) | ||||||||
| Merchandise inventories | 33,609 | (39,893 | ) | |||||||||
| Promotional material inventories | 3,523 | (8,693 | ) | |||||||||
| Prepaid expenses and other assets | 4,087 | 2,606 | ||||||||||
| Current income taxes payable | (524 | ) | 16,016 | |||||||||
| Accounts payable and other liabilities | 10,983 | 19,759 | ||||||||||
| Net cash provided by operating activities | 136,468 | 34,096 | ||||||||||
| Investing Activities | ||||||||||||
| Purchase of customer accounts receivable | (1,140,370 | ) | (1,197,537 | ) | ||||||||
| Proceeds from sale of customer accounts receivable | 1,085,844 | 1,198,146 | ||||||||||
| Acquisitions, net of cash on hand | — | (375,313 | ) | |||||||||
| Net purchase of property and equipment | (43,383 | ) | (35,935 | ) | ||||||||
| Net decrease (increase) in restricted cash | 6,772 | (9,060 | ) | |||||||||
| Net cash used in investing activities | (91,137 | ) | (419,699 | ) | ||||||||
| Financing Activities | ||||||||||||
| Borrowings of debt | — | 269,246 | ||||||||||
| Repayments of debt | (29,732 | ) | (43,282 | ) | ||||||||
| Extinguishment of debt | (16,983 | ) | — | |||||||||
| Borrowings on asset backed line of credit | 840,760 | 481,712 | ||||||||||
| Repayments on asset backed line of credit | (843,330 | ) | (469,425 | ) | ||||||||
| Cash equity contributions | — | 100,000 | ||||||||||
| Net cash (used in) provided by financing activities | (49,285 | ) | 338,251 | |||||||||
| Net Decrease in Cash and Cash Equivalents | (3,954 | ) | (47,352 | ) | ||||||||
| Cash and Cash Equivalents, Beginning of Period | 11,870 | 59,222 | ||||||||||
| Cash and Cash Equivalents, End of Period | $ | 7,916 | $ | 11,870 | ||||||||
|
BLUESTEM BRANDS, INC. Supplemental Financial Information - Segment Net Sales (unaudited - in thousands, except average order size) |
||||||||||||||||||||||||||||
| Fiscal Quarters Ended | ||||||||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||||||||||||||||||
| (14-weeks) | (13-weeks) | Change | ||||||||||||||||||||||||||
| $ | % of Sales | $ | % of Sales | % | ||||||||||||||||||||||||
| Total sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 183,952 | 23.8 | % | $ | 184,222 | 24.2 | % | (0.1 | )% | ||||||||||||||||||
| Entertainment | 241,725 | 31.3 | % | 247,255 | 32.5 | % | (2.2 | )% | ||||||||||||||||||||
| Fashion | 347,182 | 44.9 | % | 328,874 | 43.3 | % | 5.6 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 772,859 | 100.0 | % | 760,351 | 100.0 | % | 1.6 | % | ||||||||||||||||||||
| Corporate | 16,680 | 22,022 | ||||||||||||||||||||||||||
| Returns and allowances | (63,118 | ) | (66,209 | ) | (4.7 | )% | ||||||||||||||||||||||
| Commissions and other revenues | 23,906 | 21,518 | 11.1 | % | ||||||||||||||||||||||||
| Net sales | $ | 750,327 | $ | 737,682 | 1.7 | % | ||||||||||||||||||||||
| Gross profit rate | 43.0 | % | 45.2 | % | (230 | ) | bps | |||||||||||||||||||||
| Sales and marketing expense | 19.7 | % | 22.6 | % | (290 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | 11.7 | % | 18.2 | % | (650 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 132 | $ | 135 | ||||||||||||||||||||||||
| Northstar Portfolio sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 153,946 | 32.9 | % | $ | 153,558 | 32.3 | % | 0.3 | % | ||||||||||||||||||
| Entertainment | 220,710 | 47.2 | % | 230,951 | 48.7 | % | (4.4 | )% | ||||||||||||||||||||
| Fashion | 92,998 | 19.9 | % | 89,917 | 19.0 | % | 3.4 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 467,654 | 100.0 | % | 474,426 | 100.0 | % | (1.4 | )% | ||||||||||||||||||||
| Returns and allowances | (25,523 | ) | (29,446 | ) | (13.3 | )% | ||||||||||||||||||||||
| Commissions and other revenues | 7,875 | 7,238 | 8.8 | % | ||||||||||||||||||||||||
| Net sales | $ | 450,006 | $ | 452,218 | (0.5 | )% | ||||||||||||||||||||||
| Gross profit rate | 39.6 | % | 41.6 | % | (190 | ) | bps | |||||||||||||||||||||
| Sales and marketing expense | 11.3 | % | 15.6 | % | (430 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | 10.3 | % | 19.2 | % | (890 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 233 | $ | 244 | ||||||||||||||||||||||||
| Orchard Portfolio sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 21,475 | 7.9 | % | $ | 25,233 | 9.7 | % | (14.9 | )% | ||||||||||||||||||
| Fashion | 249,283 | 92.1 | % | 236,053 | 90.3 | % | 5.6 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 270,758 | 100.0 | % | 261,286 | 100.0 | % | 3.6 | % | ||||||||||||||||||||
| Returns and allowances | (35,968 | ) | (35,571 | ) | 1.1 | % | ||||||||||||||||||||||
| Commissions and other revenues | 15,365 | 13,769 | 11.6 | % | ||||||||||||||||||||||||
| Net sales | $ | 250,155 | $ | 239,484 | 4.5 | % | ||||||||||||||||||||||
| Gross profit rate | 49.7 | % | 53.8 | % | (410 | ) | bps | |||||||||||||||||||||
| Sales and marketing expense | 36.1 | % | 36.7 | % | (60 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | 13.6 | % | 17.2 | % | (360 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 71 | $ | 72 | ||||||||||||||||||||||||
| PayCheck Direct sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 8,531 | 24.8 | % | $ | 5,431 | 22.0 | % | 57.1 | % | ||||||||||||||||||
| Entertainment | 21,015 | 61.0 | % | 16,304 | 66.2 | % | 28.9 | % | ||||||||||||||||||||
| Fashion | 4,901 | 14.2 | % | 2,904 | 11.8 | % | 68.8 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 34,447 | 100.0 | % | 24,639 | 100.0 | % | 39.8 | % | ||||||||||||||||||||
| Returns and allowances | (1,627 | ) | (1,192 | ) | 36.5 | % | ||||||||||||||||||||||
| Commissions and other revenues | 666 | 511 | 30.3 | % | ||||||||||||||||||||||||
| Net sales | $ | 33,486 | $ | 23,958 | 39.8 | % | ||||||||||||||||||||||
| Gross profit rate | 35.5 | % | 32.9 | % | 260 | bps | ||||||||||||||||||||||
| Sales and marketing expense | 8.2 | % | 13.4 | % | (520 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | 11.2 | % | 10.2 | % | 100 | bps | ||||||||||||||||||||||
| Average order size (c) | $ | 546 | $ | 566 | ||||||||||||||||||||||||
(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 merchandise
sales including shipping and handling revenue divided by the number of
merchandise orders fulfilled during the fiscal period presented.
| Fiscal Years Ended | ||||||||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||||||||||||||||||
| (53-weeks) | (52-weeks) | Change | ||||||||||||||||||||||||||
| $ | % of Sales | $ | % of Sales | % | ||||||||||||||||||||||||
| Total sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 566,907 | 25.4 | % | $ | 554,355 | 30.3 | % | 2.3 | % | ||||||||||||||||||
| Entertainment | 509,166 | 22.8 | % | 538,616 | 29.4 | % | (5.5 | )% | ||||||||||||||||||||
| Fashion | 1,155,992 | 51.8 | % | 736,201 | 40.3 | % | 57.0 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 2,232,065 | 100.0 | % | 1,829,172 | 100.0 | % | 22.0 | % | ||||||||||||||||||||
| Corporate | 2,546 | 864 | ||||||||||||||||||||||||||
| Returns and allowances | (220,286 | ) | (162,466 | ) | 35.6 | % | ||||||||||||||||||||||
| Commissions and other revenues | 77,705 | 52,619 | 47.7 | % | ||||||||||||||||||||||||
| Net sales | $ | 2,092,030 | $ | 1,720,189 | 21.6 | % | ||||||||||||||||||||||
| Gross profit rate | 46.0 | % | 45.5 | % | 50 | bps | ||||||||||||||||||||||
| Sales and marketing expense | 25.9 | % | 24.0 | % | 190 | bps | ||||||||||||||||||||||
| Contribution margin rate (b) | 13.0 | % | 17.8 | % | (480 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 115 | $ | 138 | ||||||||||||||||||||||||
| Northstar Portfolio sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 457,215 | 40.7 | % | $ | 486,234 | 40.6 | % | (6.0 | )% | ||||||||||||||||||
| Entertainment | 468,532 | 41.8 | % | 507,643 | 42.4 | % | (7.7 | )% | ||||||||||||||||||||
| Fashion | 196,460 | 17.5 | % | 203,933 | 17.0 | % | (3.7 | )% | ||||||||||||||||||||
| Total merchandise sales (a) | 1,122,207 | 100.0 | % | 1,197,810 | 100.0 | % | (6.3 | )% | ||||||||||||||||||||
| Returns and allowances | (70,245 | ) | (80,267 | ) | (12.5 | )% | ||||||||||||||||||||||
| Commissions and other revenues | 22,210 | 20,952 | 6.0 | % | ||||||||||||||||||||||||
| Net sales | $ | 1,074,172 | $ | 1,138,495 | (5.6 | )% | ||||||||||||||||||||||
| Gross profit rate | 40.6 | % | 41.8 | % | (120 | ) | bps | |||||||||||||||||||||
| Sales and marketing expense | 15.8 | % | 17.7 | % | (190 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | 12.3 | % | 18.9 | % | (660 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 231 | $ | 234 | ||||||||||||||||||||||||
| Orchard Portfolio sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 86,716 | 8.4 | % | $ | 54,747 | 9.4 | % | 58.4 | % | ||||||||||||||||||
| Fashion | 950,553 | 91.6 | % | 527,627 | 90.6 | % | 80.2 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 1,037,269 | 100.0 | % | 582,374 | 100.0 | % | 78.1 | % | ||||||||||||||||||||
| Returns and allowances | (146,697 | ) | (79,910 | ) | 83.6 | % | ||||||||||||||||||||||
| Commissions and other revenues | 54,073 | 30,573 | 76.9 | % | ||||||||||||||||||||||||
| Net sales | $ | 944,645 | $ | 533,037 | 77.2 | % | ||||||||||||||||||||||
| Gross profit rate | 52.9 | % | 54.8 | % | (190 | ) | bps | |||||||||||||||||||||
| Sales and marketing expense | 37.8 | % | 37.3 | % | 50 | bps | ||||||||||||||||||||||
| Contribution margin rate (b) | 15.1 | % | 17.6 | % | (250 | ) | bps | |||||||||||||||||||||
| Average order size (c) | $ | 72 | $ | 73 | ||||||||||||||||||||||||
| PayCheck Direct sales by merchandise category: | ||||||||||||||||||||||||||||
| Home | $ | 22,976 | 31.6 | % | $ | 13,374 | 27.3 | % | 71.8 | % | ||||||||||||||||||
| Entertainment | 40,634 | 56.0 | % | 30,973 | 63.2 | % | 31.2 | % | ||||||||||||||||||||
| Fashion | 8,979 | 12.4 | % | 4,641 | 9.5 | % | 93.5 | % | ||||||||||||||||||||
| Total merchandise sales (a) | 72,589 | 100.0 | % | 48,988 | 100.0 | % | 48.2 | % | ||||||||||||||||||||
| Returns and allowances | (3,344 | ) | (2,289 | ) | 46.1 | % | ||||||||||||||||||||||
| Commissions and other revenues | 1,422 | 1,094 | 30.0 | % | ||||||||||||||||||||||||
| Net sales | $ | 70,667 | $ | 47,793 | 47.9 | % | ||||||||||||||||||||||
| Gross profit rate | 35.2 | % | 32.4 | % | 280 | bps | ||||||||||||||||||||||
| Sales and marketing expense | 19.5 | % | 23.1 | % | (360 | ) | bps | |||||||||||||||||||||
| Contribution margin rate (b) | (0.4 | )% | (2.0 | )% | 160 | bps | ||||||||||||||||||||||
| Average order size (c) | $ | 534 | $ | 571 | ||||||||||||||||||||||||
(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 merchandise
sales including shipping and handling revenue divided by the number of
merchandise orders fulfilled during the fiscal period presented.
|
BLUESTEM BRANDS, INC. Supplemental Financial Information - Credit Portfolio (unaudited - in thousands, except average balance outstanding) |
||||||||||||||||||
| Fiscal Quarters Ended | ||||||||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||||||||
| (14-weeks) | (13-weeks) | Change | ||||||||||||||||
| Net credit expense: | ||||||||||||||||||
| Credit management costs | $ | 21,697 | $ | 21,664 | 0.2 | % | ||||||||||||
| Provision for doubtful accounts - company-owned customer accounts receivable | 11,585 | 8,269 | 40.1 | % | ||||||||||||||
| Provision for doubtful accounts - loss on sale of customer accounts receivable sold to SCUSA | 42,214 | 12,140 | 247.7 | % | ||||||||||||||
| Provision for doubtful accounts | 53,799 | 20,409 | 163.6 | % | ||||||||||||||
| Finance charge and fee income | (1,249 | ) | (1,400 | ) | (10.8 | )% | ||||||||||||
| Servicing fee income and portfolio profit sharing | (9,869 | ) | (7,889 | ) | 25.1 | % | ||||||||||||
| Loss on servicing right | 22,323 | — | n/m | |||||||||||||||
| Net credit expense | $ | 86,701 | $ | 32,784 | 164.5 | % | ||||||||||||
| Serviced Portfolio Selected Credit Data: | Fiscal Quarter Ended | |||||||||||||||||
| February 3, 2017 (14-weeks) | ||||||||||||||||||
| Revolving(a) | FreshStart(b) | PCD Installment(c) | ||||||||||||||||
| Balance active accounts | 1,928 | 157 | 79 | |||||||||||||||
| Average balance outstanding | $ | 789 | $ | 112 | $ | 609 | ||||||||||||
| Customer accounts receivable | $ | 1,520,520 | $ | 17,474 | $ | 48,396 | ||||||||||||
| Balances 30+ days delinquent (d) | $ | 244,217 | $ | 3,726 | $ | 2,393 | ||||||||||||
| Balances 30+ days delinquent as a percentage of total customer accounts receivable (e) | 16.1 | % | 21.3 | % | 4.9 | % | ||||||||||||
| Average customer accounts receivable | $ | 1,475,963 | $ | 14,889 | $ | 42,909 | ||||||||||||
| Finance charge and fee income | $ | 89,374 | $ | 1,230 | n/a | |||||||||||||
| Finance charge and fee income rate (f) | 24.2 | % | 16.0 | % | n/a | |||||||||||||
| Net principal charge-offs | $ | 74,675 | $ | 2,406 | $ | 2,084 | ||||||||||||
| Net principal charge-off rate (g) | 20.2 | % | 31.2 | % | 19.4 | % | ||||||||||||
| Fiscal Quarter Ended | ||||||||||||||||||
| January 29, 2016 (13-weeks) | ||||||||||||||||||
| Revolving(a) | FreshStart(b) | PCD Installment(c) | ||||||||||||||||
| 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 (d) | $ | 216,089 | $ | 4,684 | $ | 1,349 | ||||||||||||
| Balances 30+ days delinquent as a percentage of total customer accounts receivable (e) | 14.7 | % | 25.0 | % | 3.8 | % | ||||||||||||
| Average customer accounts receivable | $ | 1,414,723 | $ | 16,287 | $ | 30,637 | ||||||||||||
| Finance charge and fee income | $ | 93,524 | $ | 1,285 | n/a | |||||||||||||
| Finance charge and fee income rate (f) | 26.4 | % | 14.3 | % | n/a | |||||||||||||
| Net principal charge-offs | $ | 63,196 | $ | 2,801 | $ | 1,084 | ||||||||||||
| Net principal charge-off rate (g) | 17.8 | % | 31.2 | % | 14.2 | % | ||||||||||||
(a) Revolving serviced portfolio includes Northstar Portfolio revolving
credit accounts.
(b) FreshStart serviced portfolio is Fingerhut's
installment accounts.
(c) PayCheck Direct ("PCD") installment
serviced portfolio is installment receivables issued to consumers who
are members and employees of participating organizations and employers
in the PCD program.
(d) Delinquent balances as of the customers'
statement cycle dates prior to or on fiscal period end.
(e)
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.
(f) Revolving finance charge and fee income rate
represents finance charge and fee income as a percentage of average
customer accounts receivable for the 14-weeks ended February 3, 2017 and
13-weeks ended January 29, 2016 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 14- and 13-week
periods ended February 3, 2017 and January 29, 2016, respectively.
(g)
Revolving and PCD Installment net principal charge-off rate represents
net principal charge-offs as a percentage of average customer accounts
receivable for the 14-weeks ended February 3, 2017 and 13-weeks ended
January 29, 2016 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 14- and 13-week periods ended February 3, 2017
and January 29, 2016, respectively.
| Fiscal Years Ended | ||||||||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||||||||
| (53-weeks) | (52-weeks) | Change | ||||||||||||||||
| Net credit expense: | ||||||||||||||||||
| Credit management costs | $ | 78,217 | $ | 78,133 | 0.1 | % | ||||||||||||
| Provision for doubtful accounts - company-owned customer accounts receivable | 23,785 | 19,064 | 24.8 | % | ||||||||||||||
| Provision for doubtful accounts - loss on sale of customer accounts receivable sold to SCUSA | 54,807 | 12,140 | 351.5 | % | ||||||||||||||
| Provision for doubtful accounts | 78,592 | 31,204 | 151.9 | % | ||||||||||||||
| Finance charge and fee income | (2,674 | ) | (6,048 | ) | (55.8 | )% | ||||||||||||
| Servicing fee income and portfolio profit sharing | (30,038 | ) | (39,254 | ) | (23.5 | )% | ||||||||||||
| Loss on servicing right | 22,323 | — | n/m | |||||||||||||||
| Net credit expense | $ | 146,420 | $ | 64,035 | 128.7 | % | ||||||||||||
| Serviced Portfolio Selected Credit Data: | Fiscal Years Ended | |||||||||||||||||
| February 3, 2017 (53-weeks) | ||||||||||||||||||
| Revolving(a) | FreshStart(b) | PCD Installment(c) | ||||||||||||||||
| Balance active accounts | 1,928 | 157 | 79 | |||||||||||||||
| Average balance outstanding | $ | 789 | $ | 112 | $ | 609 | ||||||||||||
| Customer accounts receivable | $ | 1,520,520 | $ | 17,474 | $ | 48,396 | ||||||||||||
| Balances 30+ days delinquent (d) | $ | 244,217 | $ | 3,726 | $ | 2,393 | ||||||||||||
| Balances 30+ days delinquent as a percentage of total customer accounts receivable (e) | 16.1 | % | 21.3 | % | 4.9 | % | ||||||||||||
| Average customer accounts receivable | $ | 1,402,481 | $ | 14,210 | $ | 35,014 | ||||||||||||
| Finance charge and fee income | $ | 365,147 | $ | 2,412 | n/a | |||||||||||||
| Finance charge and fee income rate (f) | 26.0 | % | 5.8 | % | n/a | |||||||||||||
| Net principal charge-offs | $ | 272,842 | $ | 13,229 | $ | 6,448 | ||||||||||||
| Net principal charge-off rate (g) | 19.5 | % | 31.8 | % | 18.4 | % | ||||||||||||
| Fiscal Years Ended | ||||||||||||||||||
| January 29, 2016 (52-weeks) | ||||||||||||||||||
| Revolving(a) | FreshStart(b) | PCD Installment(c) | ||||||||||||||||
| 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 (d) | $ | 216,089 | $ | 4,684 | $ | 1,349 | ||||||||||||
| Balances 30+ days delinquent as a percentage of total customer accounts receivable (e) | 14.7 | % | 25.0 | % | 3.8 | % | ||||||||||||
| Average customer accounts receivable | $ | 1,289,787 | $ | 17,187 | $ | 20,864 | ||||||||||||
| Finance charge and fee income | $ | 360,870 | $ | 3,038 | n/a | |||||||||||||
| Finance charge and fee income rate (f) | 28.0 | % | 6.1 | % | n/a | |||||||||||||
| Net principal charge-offs | $ | 235,735 | $ | 16,758 | $ | 2,962 | ||||||||||||
| Net principal charge-off rate (g) | 18.3 | % | 33.5 | % | 14.2 | % | ||||||||||||
(a) Revolving serviced portfolio includes Northstar Portfolio revolving
credit accounts.
(b) FreshStart serviced portfolio is Fingerhut's
installment accounts.
(c) PayCheck Direct ("PCD") installment
serviced portfolio is installment receivables issued to consumers who
are members and employees of participating organizations and employers
in the PCD program.
(d) Delinquent balances as of the customers'
statement cycle dates prior to or on fiscal period end.
(e)
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.
(f) Revolving finance charge and fee income rate
represents finance charge and fee income as a percentage of average
customer accounts receivable for the fiscal years ended February 3, 2017
and January 29, 2016 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 52 weeks of FreshStart related
sales five months prior to the fiscal years ended February 3, 2017 and
January 29, 2016.
(g) Revolving and PCD Installment net
principal charge-off rate represents net principal charge-offs as a
percentage of average customer accounts receivable for the fiscal years
ended February 3, 2017 and January 29, 2016 annualized to 52-week
periods for comparability. 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 fiscal years ended
February 3, 2017 and January 29, 2016.
BLUESTEM BRANDS, INC.
Non-GAAP Financial Measures
(unaudited
- in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries for the 14- and 53-weeks ended February 3, 2017, which are presented in accordance with 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. 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, acquisition transaction costs, integration costs, lease termination costs and other.
Adjusted EBITDA, as presented, represents net loss before income tax (benefit) expense, interest expense, amortization and depreciation expense, loss on impairment, loss on servicing right, gain on debt extinguishment, stock-based compensation expense, acquisition transaction costs, integration costs, lease termination costs and other.
Free cash flow, as presented, represents Adjusted EBITDA, as defined above, less maintenance capital expenditures.
Program agreement adjusted EBITDA, as presented, represents Adjusted EBITDA, as defined above, plus adjustments allowed for under Bluestem's Program Agreement including certain transaction-related expected cost savings, certain non-cash charges, certain one-time charges and expected cost savings reflecting the projected impact of cost synergies such as savings in print and paper, transportation, credit operations and marketing. Other includes charges such as, but not limited to or necessarily inclusive of, strategic investments, system implementations, executive recruiting and public company cost.
Lender adjusted EBITDA, as presented, represents Program Agreement Adjusted EBITDA, as defined above, less designated unrestricted subsidiaries, which consists of the subsidiary making sales for our PayCheck Direct business, and incremental expected cost savings as allowed for under Bluestem's lender agreements.
Leverage ratio debt, as presented, is defined as short-term debt plus long-term debt plus deferred charges and less cash and cash equivalents.
Program agreement leverage ratio, as presented, represents Leverage Ratio Debt, as defined above, divided by Program Agreement Adjusted EBITDA, as defined above.
Lender leverage ratio, as presented, represents Leverage Ratio Debt, as defined above, divided by Lender Adjusted EBITDA, as defined above.
Working capital, as presented, is defined as total current assets less total current liabilities.
Adjusted working capital, as presented, represents working capital, as defined above, plus current income taxes payable.
Program agreement net liquidity, as presented, is defined as cash and cash equivalents less credit card receivables ("Lender cash and cash equivalents") as defined by the lender plus availability under the asset backed line of credit.
Lender net liquidity, as presented, is defined as program net liquidity, as defined above, less unrestricted subsidiary cash as defined by the lender.
We provide these measures because we believe they are useful to investors in evaluating our operating performance and financial condition compared to other companies in our industry and to evaluate our financial condition and operating performance compared to term loan and program agreement financial covenants. 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, free cash flow, program agreement adjusted EBITDA, lender adjusted EBITDA, lender leverage ratio debt, program agreement leverage ratio, lender leverage ratio, working capital, adjusted working capital, and program and lender net liquidity may not be comparable to the calculations of such measures by other companies. The results of Orchard Brands Corporation and its subsidiaries are included in the results from the acquisition date of July 10, 2015.
The following table reconciles contribution margin from the nearest GAAP performance measure, which is net loss:
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | |||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | |||||||||||||||||||||
| Contribution margin: | ||||||||||||||||||||||||
| Net loss | $ | (304,938 | ) | $ | (6,813 | ) | $ | (352,471 | ) | $ | (26,309 | ) | ||||||||||||
| Income tax (benefit) expense | (69,872 | ) | 10,971 | (97,829 | ) | (10,191 | ) | |||||||||||||||||
| Interest expense, net | 14,141 | 13,701 | 54,778 | 43,920 | ||||||||||||||||||||
| Gain on debt extinguishment | (3,456 | ) | — | (3,456 | ) | — | ||||||||||||||||||
| Loss on impairment | 354,432 | 20,200 | 354,862 | 20,200 | ||||||||||||||||||||
| Amortization and depreciation not included in cost of sales | 45,297 | 32,963 | 97,135 | 78,183 | ||||||||||||||||||||
| General and administrative expenses | 51,930 | 63,272 | 219,859 | 200,276 | ||||||||||||||||||||
| Contribution margin | $ | 87,534 | $ | 134,294 | $ | 272,878 | $ | 306,079 | ||||||||||||||||
| Contribution margin % of net sales | 11.7 | % | 18.2 | % | 13.0 | % | 17.8 | % | ||||||||||||||||
The following table reconciles adjusted general and administrative expenses from the nearest GAAP performance measure, which is general and administrative expenses:
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | |||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | |||||||||||||||||||||
| Adjusted general and administrative expenses: | ||||||||||||||||||||||||
| General and administrative expenses | $ | 51,930 | $ | 63,272 | $ | 219,859 | $ | 200,276 | ||||||||||||||||
| Less: | ||||||||||||||||||||||||
| Stock-based compensation expense | 1,318 | 1,099 | 4,946 | 4,106 | ||||||||||||||||||||
| Acquisition transaction costs | — | — | — | 8,342 | ||||||||||||||||||||
| Integration costs | 1,669 | 2,635 | 5,590 | 5,607 | ||||||||||||||||||||
| Lease termination costs | — | — | — | 1,122 | ||||||||||||||||||||
| Other | (1,795 | ) | 402 | (12 | ) | 2,397 | ||||||||||||||||||
| Adjusted general and administrative expenses | $ | 50,738 | $ | 59,136 | $ | 209,335 | $ | 178,702 | ||||||||||||||||
| Adjusted general and administrative expenses % of net sales | 6.8 | % | 8.0 | % | 10.0 | % | 10.4 | % | ||||||||||||||||
The following table reconciles adjusted EBITDA from the nearest GAAP performance measure, which is net loss:
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | |||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | |||||||||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||||||
| Net loss | $ | (304,938 | ) | $ | (6,813 | ) | $ | (352,471 | ) | $ | (26,309 | ) | ||||||||||||
| Income tax (benefit) expense | (69,872 | ) | 10,971 | (97,829 | ) | (10,191 | ) | |||||||||||||||||
| Interest expense | 14,159 | 13,704 | 54,797 | 43,927 | ||||||||||||||||||||
| Amortization and depreciation expense | 46,465 | 34,066 | 101,606 | 81,127 | ||||||||||||||||||||
| Loss on impairment | 354,432 | 20,200 | 354,862 | 20,200 | ||||||||||||||||||||
| EBITDA | 40,246 | 72,128 | 60,965 | 108,754 | ||||||||||||||||||||
| Loss on servicing right | 22,323 | — | 22,323 | — | ||||||||||||||||||||
| Gain on debt extinguishment | (3,456 | ) | — | (3,456 | ) | — | ||||||||||||||||||
| Stock-based compensation expense | 1,318 | 1,099 | 4,946 | 4,106 | ||||||||||||||||||||
| Acquisition transaction costs | — | — | — | 8,342 | ||||||||||||||||||||
| Integration costs | 1,669 | 2,635 | 5,590 | 5,607 | ||||||||||||||||||||
| Lease termination costs | — | — | — | 1,122 | ||||||||||||||||||||
| Other | (1,668 | ) | 529 | 496 | 2,894 | |||||||||||||||||||
| Adjusted EBITDA | $ | 60,432 | $ | 76,391 | $ | 90,864 | $ | 130,825 | ||||||||||||||||
| Adjusted EBITDA % of net sales | 8.1 | % | 10.4 | % | 4.3 | % | 7.6 | % | ||||||||||||||||
The following table reconciles free cash flow from adjusted EBITDA:
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||
| February 3, 2017 | January 29, 2016 | February 3, 2017 | January 29, 2016 | |||||||||||||||||||||
| (14-weeks) | (13-weeks) | (53-weeks) | (52-weeks) | |||||||||||||||||||||
| Free cash flow: | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 60,432 | $ | 76,391 | $ | 90,864 | $ | 130,825 | ||||||||||||||||
| Less: | ||||||||||||||||||||||||
| Maintenance capital expenditures | 2,824 | 6,681 | 19,224 | 18,257 | ||||||||||||||||||||
| Free cash flow | $ | 57,608 | $ | 69,710 | $ | 71,640 | $ | 112,568 | ||||||||||||||||
| Free cash flow % of net sales | 7.7 | % | 9.4 | % | 3.4 | % | 6.5 | % | ||||||||||||||||
The following table presents trailing twelve months lender adjusted EBITDA and leverage ratios:
| Trailing Twelve Fiscal Months | ||||||||||||
| February 3, 2017 | January 29, 2016 | |||||||||||
| (53-weeks) | (52-weeks) | |||||||||||
| Adjusted EBITDA | $ | 90,864 | $ | 130,825 | ||||||||
| Expected cost savings (a) | 18,002 | — | ||||||||||
| Orchard pre-acquisition adjusted EBITDA | — | 26,641 | ||||||||||
| Non-cash charges | 936 | — | ||||||||||
| One-time charges | 858 | — | ||||||||||
| Other (b) | 11,714 | 6,515 | ||||||||||
| Program agreement adjusted EBITDA | 122,374 | 163,981 | ||||||||||
| Unrestricted subsidiary (c) | 16,452 | — | ||||||||||
| Incremental expected cost savings (a,d) | 3,023 | — | ||||||||||
| Lender adjusted EBITDA | $ | 141,849 | $ | 163,981 | ||||||||
| Leverage ratio debt: | ||||||||||||
| Short-term debt | ||||||||||||
| Current portion of term loan, net of discount | $ | 23,943 | $ | 24,877 | ||||||||
| Asset backed line of credit | 21,154 | 20,790 | ||||||||||
| Capital lease obligation and other | 2,403 | 2,314 | ||||||||||
| Total short-term debt | 47,500 | 47,981 | ||||||||||
| Term loan, net of discount | 443,488 | 487,560 | ||||||||||
| Capital lease obligation | 2,248 | 2,472 | ||||||||||
| Total long-term debt | 445,736 | 490,032 | ||||||||||
| Total debt | 493,236 | 538,013 | ||||||||||
| Plus: Deferred charges | 9,381 | 12,429 | ||||||||||
| Less: Cash and cash equivalents | (4,220 | ) | (2,949 | ) | ||||||||
| Leverage ratio debt | $ | 498,397 | $ | 547,493 | ||||||||
| Program agreement leverage ratio | 4.07 | 3.34 | ||||||||||
| Program agreement leverage ratio requirement | 5.00 | 5.00 | ||||||||||
| Lender leverage ratio | 3.51 | 3.34 | ||||||||||
| Lender leverage ratio requirement | 4.50 | 5.00 | ||||||||||
(a) Expected cost savings reflects the projected impact of cost
synergies such as, but not limited to or necessarily inclusive of the
implemented headcount reductions, catalog circulation reductions and
anticipated vendor savings.
(b) Other includes charges such as, but
not limited to or necessarily inclusive of, strategic investment
charges, system implementation charges, executive recruiting and pubic
company costs.
(c) Bluestem Enterprises, Inc ("BEI"), a subsidiary
of Bluestem, was designated as an unrestricted subsidiary under
Bluestem's term loan agreement in fiscal 2016, which requires BEI's
results of operations to be excluded from Bluestem's consolidated
adjusted EBITDA calculation per the term loan agreement.
(d) Due to
the unrestricted subsidiary designation, incremental expected cost
savings above Program Agreement threshold limitations are able to be
included in lender adjusted EBITDA.
The following table presents adjusted working capital and net liquidities:
| February 3, 2017 | January 29, 2016 | |||||||||||
| Total current assets | $ | 381,278 | $ | 428,280 | ||||||||
| Total current liabilities | 386,153 | 374,778 | ||||||||||
| Working capital | $ | (4,875 | ) | $ | 53,502 | |||||||
| Plus: Current income taxes payable (e) | 34,059 | 34,583 | ||||||||||
| Adjusted working capital | $ | 29,184 | $ | 88,085 | ||||||||
| Cash & cash equivalents | $ | 7,916 | $ | 11,870 | ||||||||
| Less: Third party credit card receivables | (3,696 | ) | (8,921 | ) | ||||||||
| Lender cash & cash equivalents | 4,220 | 2,949 | ||||||||||
| Plus: Asset backed line availability | 100,237 | 115,392 | ||||||||||
| Program agreement net liquidity | $ | 104,457 | $ | 118,341 | ||||||||
| Less: Unrestricted subsidiary cash | (54 | ) | — | |||||||||
| Lender net liquidity | $ | 104,403 | $ | 118,341 | ||||||||
| Program agreement and lender net liquidity requirement | $ | 40,000 | $ | 40,000 | ||||||||
(e) Current income taxes payable are substantially all inter-company liabilities among entities consolidated within Bluestem Group Inc.