Conn's, Inc. (NASDAQ:CONN) Q3 2019 Earnings Conference Call Transcript

Dec 04, 2018 • 11:00 am ET


Conn's, Inc. (NASDAQ:CONN) Q3 2019 Earnings Conference Call Transcript


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Good morning, and thank you for holding. Welcome to the Conn's, Inc., Conference Call to discuss earnings for the fiscal quarter ended October 31, 2018. My name is Dough and I'll be your operator today. During the presentation all participants will be in a listen-only mode. After the speakers' remarks you will be invited to participate in a question-and-answer session. As a reminder, this conference call is being recorded.

The company's earnings release dated September 4, 2018 distributed before market opened this morning can be accessed via the company's Investor Relations website at (Forward-Looking Cautionary Statements).

Your speakers today are Norm Miller, the company's CEO; and Lee Wright, the company's CFO.

I would now like to turn the conference call over to Mr. Miller. Please go ahead.

Norm Miller

Good morning and welcome to Conn's third quarter fiscal year 2019 earnings conference call. I will begin the call with an overview and then Lee will complete our prepared remarks with additional comments on the financial results.

Fiscal year 2019 is shaping up to be one of the best years of profitability in Conn's 128-year history. Through the first nine months of fiscal year 2019, operating income was $107.5 million, an increase of 53.1% from the prior fiscal year period with increases in both the retail and credit segment. This also represents the second highest nine-month operating income we have ever achieved, which reflects our growing credit spread and strong retail growth and operating margin.

Our consolidated operating margin before charges and credits was 10.1% for the first nine months of fiscal year 2019 and is the highest operating margin we have achieved in five fiscal years. Our third quarter results demonstrate that the strategies we have implemented are achieving their intended result as our credit spread approaches a 1,000 basis points and we progress towards positive same-store sales. With a strong highly profitable foundation now in place, we are well positioned to capitalize on our compelling long-term and differentiated growth strategy. So with this introduction, let's look at our third quarter results in more detail, starting with our retail business.

I'm pleased with the overall trend of same-store sales and the initiatives underway to improve retail performance. Throughout our retail transformation, we have successfully improved retail margins invested in our retail operations and created a powerful platform to execute our retail growth opportunity. We believe our non-Harvey market performance is the best indicator to use when analyzing retail trends during the quarters impacted by the hurricane. As a result, the presentation posted on our website this morning includes a slide on the same-store sales performance by category within our non-Harvey and Harvey market.

I encourage analyst and investors to review this slide, as I comment on the increasing momentum underway in our retail segment. I'm pleased to report that the same-store sales for the month of November in non-Harvey markets were up 8.5%. This drove a 3.6% increase in total same-store sales for the month of November, which included a 7.5% decline