FY22 Consolidated GAAP Net Loss Improved by $71
million
FY22 Non-GAAP Adjusted EBITDA Improved by $61
million
BNC’s First Day® Complete and First Day®
Inclusive Access Offerings Fiscal 2022 Revenue Grew 91%
FY22 Retail Segment Gross Comparable Store
Sales Increased 20%
FY22 General Merchandise Gross Comparable Store
Sales Increased 76%
Barnes & Noble Education, Inc. (NYSE: BNED), a
leading solutions provider for the education industry, today
reported sales and earnings for the fourth quarter and fiscal year
2022, which ended on April 30, 2022.
The improvement in financial results compared to the prior year
is primarily related to the re-opening of stores that had
temporarily closed due to the COVID-19 pandemic in the prior year.
The comparability of sales, specifically logo and emblematic sales,
is impacted by the recognition of logo and emblematic sales on a
net basis in our consolidated financial statements during fiscal
year 2022, as compared to on a gross basis prior to April 4, 2021
of fiscal year 2021. See the Retail Gross Comparable Store Sales
below.
Financial results for the fourth quarter and fiscal year
2022:
- Consolidated fourth quarter GAAP sales of $260.8 million
increased 17.1% as compared to the prior year period; consolidated
fiscal year sales of $1,531.4 million increased 6.8% as compared to
the prior year.
- Consolidated fourth quarter GAAP net loss was $(11.0) million,
compared to a restated* $(52.4) million in the prior year period.
Consolidated fiscal year GAAP net loss was $(68.9) million,
compared to a restated* $(139.8) million in the prior year.
- Consolidated fourth quarter non-GAAP Adjusted EBITDA was $(6.2)
million, compared to $(31.4) million in the prior year; the
consolidated fiscal year non-GAAP Adjusted EBITDA was $(4.8)
million, compared to $(65.6) million in the prior year.
- Consolidated fourth quarter non-GAAP Adjusted Earnings was
$(11.6) million, compared to a restated* $(40.3) million in the
prior year period; consolidated fiscal year non-GAAP Adjusted
Earnings was $(55.6) million, compared to a restated* $(96.5)
million in the prior year.
- Retail segment gross comparable store sales for the quarter
increased by 32.6%, as compared to a 6.9% decline in the prior
year; Retail segment gross comparable store sales for the year
increased by 19.6%, as compared to a 26.1% decline in the prior
year. For comparable store sales reporting purposes, logo and
emblematic general merchandise sales fulfilled by FLC and Fanatics
are included on a gross basis. Please see a more detailed
definition in the Results table and Retail segment discussion
below.
* The Company identified certain out of period adjustments
related primarily to income tax benefit, and restructuring and
other charges, for the 13 and 52 weeks ended May 1, 2021. The
adjustments increased our fiscal year 2021 reported net loss by
$8.0 million but did not have an impact on our non-GAAP Adjusted
EBITDA, cash flows or liquidity. Refer to Note 2. Summary of
Significant Accounting Policies to our consolidated financial
statements included in our Annual Report on Form 10-K for the year
ended April 30, 2022, which is expected to be filed on or about
June 29, 2022, for further information.
Operational highlights for fiscal year 2022:
- 76 campus stores utilized BNC’s First Day® Complete courseware
delivery program during the 2022 Spring Term, representing
approximately 380,000* in total undergraduate student
enrollment.
- 112 campus stores are committed to utilize BNC’s First Day®
Complete courseware delivery program during the 2022 Fall Term,
representing approximately 547,000* in total undergraduate student
enrollment, a growth rate of 85% over Fall 2021 based on
undergraduate student enrollment.
- BNC’s First Day® Complete revenue increased over 5x to $106
million.
- BNC’s First Day® by Course revenue increased 24% to $128
million.
- DSS revenue grew 30% to $35.7 million, with bartleby® revenue
growing approximately 40%.
- Continued to attract new clients and generate new business
growth, signing 92 new physical and virtual bookstores for
estimated first year annual sales of approximately $128 million, or
$102 million on a net basis.
- Barnes & Noble Education was ranked as the #1 Most Trusted
Company by Newsweek in the Retail industry category and the only
education company included in the final list of 32 retail
companies.
*As reported by National Center for Education Statistics
(NCES)
“Entering into Fiscal 2022 we expected certain challenges to
persist, including declining enrollments, fewer international
students, ongoing remote and virtual class offerings, and fewer on
campus activities. Fiscal 2022 proved to be more challenging than
we anticipated – both the Fall and Spring academic terms were
disrupted by new COVID strains,” said Michael P. Huseby, Chief
Executive Officer and Chairman, BNED. “Yet, despite the macro
challenges that the industry faced, we are highly encouraged by the
progress that has been made against our key strategic initiatives
and how strongly they are resonating with our campus partners. Many
of our campus partners see the value in ensuring their students
have all of their required course materials on or before the first
day of class with BNC’s First Day Complete revenue growing more
than 5x over the prior year, while our First Day by Course offering
simultaneously grew 24%. For the upcoming Fall term, 112 of our
campus stores are committed to utilize First Day Complete,
representing undergraduate enrollment of approximately 547,000
students, an 85% growth rate over Fall 2021 based on undergraduate
student enrollment. Our partnership with FLC and Fanatics, which
was in start-up mode for much of FY 2022, propelled our general
merchandise business growth of 76% on a comparable sales basis. Our
high-margin DSS business continued to help tutor students, gaining
400,000 gross subscribers while posting 40% annual revenue growth
for bartleby’s digital offerings.”
“As we look out to Fiscal 2023, while we expect certain
challenges to persist, especially those continuing to impact our
wholesale business, we expect our results to improve significantly
over Fiscal 2022, benefitting from the continued growth of our
strategic initiatives and the return to a more traditional
on-campus learning and events environment.”
Fourth Quarter and Fiscal Year Results for 2022
Results for the 13 weeks and 52 weeks of fiscal year 2022 and
fiscal year 2021 are as follows:
$ in millions
Selected Data (unaudited)
Restated (1)
Restated (1)
Q4 2022
Q4 2021
FY 2022
FY 2021
Total Sales
$260.8
$222.8
$1,531.4
$1,433.9
Net Loss
$(11.0)
$(52.4)
$(68.9)
$(139.8)
Non-GAAP
(2)
Adjusted EBITDA
$(6.2)
$(31.4)
$(4.8)
$(65.6)
Adjusted Earnings
$(11.6)
$(40.3)
$(55.6)
$(96.5)
Additional
Information:
Retail Gross Comparable
Store Sales Variances (3)
$55.3
$(11.7)
$240.7
$(414.6)
(1) The Company identified certain out of
period adjustments related primarily to income tax benefit, and
restructuring and other charges, for the 13 and 52 weeks ended May
1, 2021. The adjustments increased our fiscal year 2021 reported
net loss by $8.0 million but did not have an impact on our non-GAAP
Adjusted EBITDA, cash flows or liquidity. Refer to Note 2. Summary
of Significant Accounting Policies to our consolidated financial
statements included in our Annual Report on Form 10-K for the year
ended April 30, 2022, which is expected to be filed on or about
June 29, 2022, for further information.
(2) These non-GAAP financial measures have
been reconciled in the attached schedules to the most directly
comparable GAAP measure as required under SEC rules regarding the
use of non-GAAP financial measures.
(3) Retail Gross Comparable Store Sales
includes sales from physical and virtual stores that have been open
for an entire fiscal year period and does not include sales from
closed stores for all periods presented. In-store and online logo
and emblematic general merchandise sales fulfilled by FLC and
Fanatics, respectively, and are recognized on a net commission
revenue basis, as compared to the recognition of logo and
emblematic sales on a gross basis in the prior year period. For
Retail Gross Comparable Store Sales purposes, sales for logo and
emblematic general merchandise fulfilled by FLC, Fanatics and
digital agency sales are included on a gross basis.
The Company has three reportable segments: Retail, Wholesale and
Digital Student Solutions (“DSS”). Unallocated shared-service
costs, which include various corporate level expenses and other
governance functions, continue to be presented as Corporate
Services. All material intercompany accounts and transactions have
been eliminated in consolidation.
Retail Segment Results
Fourth quarter Retail sales increased $38.0 million, or 18.3%,
as compared to the prior year period. Gross comparable store sales,
which include logo and emblematic sales fulfilled by FLC and
Fanatics on a gross basis, increased 32.6% for the quarter,
compared to a negative 6.9% in the prior year period. Fourth
quarter Retail gross comparable store sales increased by 4.0% in
course material sales and 63.2% in general merchandise sales.
Fiscal year 2022 Retail sales increased $109.2 million, or 8.2%,
as compared to the prior year period. Gross comparable store sales
increased 19.6% for the fiscal year, compared to a negative 26.1%
in the prior year period. Fiscal year 2022 Retail gross comparable
store sales increased by 2.3% in course material sales and 76.1% in
general merchandise sales.
Course material sales benefitted from the growth of the
Company’s inclusive access models, which collectively grew 91% on a
full year basis to $234.2 million, despite overall undergraduate
enrollment declines in higher education. General merchandise sales
benefitted greatly from the return to the on campus learning
experience and improved merchandising of products in stores and
online resulting from the Company’s partnership with FLC and
Fanatics.
Retail non-GAAP Adjusted EBITDA was $4.2 million for the
quarter, compared to $(22.3) million in the prior year period. For
fiscal year 2022, Retail non-GAAP Adjusted EBITDA was $8.7 million,
compared to $(66.8) million in the prior year period, due to
increased sales and improved gross margin.
Wholesale Segment Results
Wholesale fourth quarter sales of $9.1 million decreased $0.6
million as compared to the prior year period. Wholesale sales for
fiscal year 2022 of $112.2 million decreased $53.6 million, as
compared to the prior year period. The wholesale business has been
affected by a number of factors, including a constraint on its used
book inventory due to the lack of on campus textbook buyback
opportunities, and lower overall customer demand resulting from the
shift in buying patterns from physical textbooks to digital course
materials.
Wholesale non-GAAP Adjusted EBITDA for the quarter was $(8.0)
million, as compared to $(7.3) million in the prior year period.
Wholesale non-GAAP Adjusted EBITDA for fiscal year 2022 was $3.8
million, compared to $18.6 million in the prior year period,
primarily due to lower sales.
DSS Segment Results
DSS fourth quarter sales of $9.7 million increased $1.3 million,
or 15.6%, as compared to the prior year period. DSS fiscal year
2022 sales of $35.7 million increased $8.3 million, or 30.3%, as
compared to the prior year period, primarily due to an increase in
bartleby subscriptions.
DSS non-GAAP Adjusted EBITDA was $1.5 million for the quarter,
compared to $1.1 million in the prior year period. DSS non-GAAP
Adjusted EBITDA was $5.5 million for fiscal year 2022, compared to
$4.5 million in the prior year period, benefitting from the growth
in bartleby subscriptions.
Other
Selling and administrative expenses for Corporate Services,
which includes unallocated shared-service costs, such as various
corporate level expenses and other governance functions, were $3.6
million for the fourth quarter and $23.0 million for the fiscal
year.
Outlook
For fiscal year 2023, the Company expects consolidated non-GAAP
Adjusted EBITDA to be between $30 million to $40 million. The
Company expects significant improvement in its Retail business
being driven by new First Day Complete implementations, growth
within its general merchandise business and new business wins. The
challenges within its wholesale business, including constrained
used book inventory and higher inflationary pressures on wages and
freight, are expected to persist. DSS non-GAAP Adjusted EBITDA is
expected to be near fiscal year 2022 levels as revenue growth is
offset by investments in product enhancements.
Conference Call
A conference call with Barnes & Noble Education, Inc. senior
management will be webcast at 8:30 a.m. Eastern Time on Wednesday,
June 29, 2022 and can be accessed at the Barnes & Noble
Education corporate website at investor.bned.com or www.bned.com.
The webcast will contain investor materials that can also be
accessed at investor.bned.com or www.bned.com.
Barnes & Noble Education expects to report fiscal year 2023
first quarter results in September 2022.
ABOUT BARNES & NOBLE EDUCATION, INC.
Barnes & Noble Education, Inc. (NYSE: BNED) is a
leading solutions provider for the education industry, driving
affordability, access and achievement at hundreds of academic
institutions nationwide and ensuring millions of students are
equipped for success in the classroom and beyond. Through its
family of brands, BNED offers campus retail services and academic
solutions, a digital direct-to-student learning ecosystem,
wholesale capabilities and more. BNED is a company serving all who
work to elevate their lives through education, supporting students,
faculty and institutions as they make tomorrow a better, more
inclusive and smarter world. For more information, visit
www.bned.com.
Forward-Looking Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and information relating to us and our business that are
based on the beliefs of our management as well as assumptions made
by and information currently available to our management. When used
in this communication, the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,”
“projections,” and similar expressions, as they relate to us or our
management, identify forward-looking statements. Moreover, we
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
we may make, including any statements made in regards to our
response to the COVID-19 pandemic. In light of these risks,
uncertainties and assumptions, the future events and trends
discussed in this press release may not occur and actual results
could differ materially and adversely from those anticipated or
implied in the forward-looking statements. Such statements reflect
our current views with respect to future events, the outcome of
which is subject to certain risks, including, among others: risks
associated with COVID-19 and the governmental responses to it,
including its impacts across our businesses on demand and
operations, as well as on the operations of our suppliers and other
business partners, and the effectiveness of our actions taken in
response to these risks; general competitive conditions, including
actions our competitors and content providers may take to grow
their businesses; a decline in college enrollment or decreased
funding available for students; decisions by colleges and
universities to outsource their physical and/or online bookstore
operations or change the operation of their bookstores;
implementation of our digital strategy may not result in the
expected growth in our digital sales and/or profitability; risk
that digital sales growth does not exceed the rate of investment
spend; the performance of our online, digital and other
initiatives, integration of and deployment of, additional products
and services including new digital channels, and enhancements to
higher education digital products, and the inability to achieve the
expected cost savings; the risk of price reductions or changes in
formats of course materials by publishers, which could negatively
impact revenues and margin; the general economic environment and
consumer spending patterns; decreased consumer demand for our
products, low growth or declining sales; the strategic objectives,
successful integration, anticipated synergies, and/or other
expected potential benefits of various acquisitions may not be
fully realized or may take longer than expected; the integration of
the operations of various acquisitions into our own may also
increase the risk of our internal controls being found ineffective;
changes to purchase or rental terms, payment terms, return
policies, the discount or margin on products or other terms with
our suppliers; our ability to successfully implement our strategic
initiatives including our ability to identify, compete for and
execute upon additional acquisitions and strategic investments;
risks associated with operation or performance of MBS Textbook
Exchange, LLC’s point-of-sales systems that are sold to college
bookstore customers; technological changes; risks associated with
counterfeit and piracy of digital and print materials; our
international operations could result in additional risks; our
ability to attract and retain employees; risks associated with data
privacy, information security and intellectual property; trends and
challenges to our business and in the locations in which we have
stores; non-renewal of managed bookstore, physical and/or online
store contracts and higher-than-anticipated store closings;
disruptions to our information technology systems, infrastructure,
data, supplier systems, and customer ordering and payment systems
due to computer malware, viruses, hacking and phishing attacks,
resulting in harm to our business and results of operations;
disruption of or interference with third party web service
providers and our own proprietary technology; work stoppages or
increases in labor costs; possible increases in shipping rates or
interruptions in shipping service; product shortages, including
decreases in the used textbook inventory supply associated with the
implementation of publishers’ digital offerings and direct to
student textbook consignment rental programs, as well as the risks
associated with the impacts that public health crises may have on
the ability of our suppliers to manufacture or source products,
particularly from outside of the United States; changes in domestic
and international laws or regulations, including U.S. tax reform,
changes in tax rates, laws and regulations, as well as related
guidance; enactment of laws or changes in enforcement practices
which may restrict or prohibit our use of texts, emails, interest
based online advertising, recurring billing or similar marketing
and sales activities; the amount of our indebtedness and ability to
comply with covenants applicable to current and /or any future debt
financing; our ability to satisfy future capital and liquidity
requirements; our ability to access the credit and capital markets
at the times and in the amounts needed and on acceptable terms;
adverse results from litigation, governmental investigations,
tax-related proceedings, or audits; changes in accounting
standards; and the other risks and uncertainties detailed in the
section titled “Risk Factors” in Part I - Item 1A in our Annual
Report on Form 10-K for the year ended April 30, 2022. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those described as anticipated, believed,
estimated, expected, intended or planned. Subsequent written and
oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements in this paragraph. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise after the date of this press release.
EXPLANATORY NOTE
We have three reportable segments: Retail, Wholesale and DSS as
follows:
- The Retail Segment operates 1,427 college, university, and K-12
school bookstores, comprised of 805 physical bookstores and 622
virtual bookstores. Our bookstores typically operate under
agreements with the college, university, or K-12 schools to be the
official bookstore and the exclusive seller of course materials and
supplies, including physical and digital products. The majority of
the physical campus bookstores have school-branded e-commerce sites
which we operate and which offer students access to affordable
course materials and affinity products, including emblematic
apparel and gifts. The Retail Segment also offers inclusive access
programs, in which course materials, including e-content, are
offered at a reduced price through a course materials fee, and
delivered to students on or before the first day of class.
Additionally, the Retail Segment offers a suite of digital content
and services to colleges and universities, including a variety of
open educational resource-based courseware.
- The Wholesale Segment is comprised of our wholesale textbook
business and is one of the largest textbook wholesalers in the
country. The Wholesale Segment centrally sources, sells, and
distributes new and used textbooks to approximately 3,100 physical
bookstores (including our Retail Segment's 805 physical bookstores)
and sources and distributes new and used textbooks to our 622
virtual bookstores. Additionally, the Wholesale Segment sells
hardware and a software suite of applications that provides
inventory management and point-of-sale solutions to approximately
350 college bookstores.
- The Digital Student Solutions ("DSS") Segment includes products
and services to assist students to study more effectively and
improve academic performance. The DSS Segment is comprised of the
operations of Student Brands, LLC, a leading direct-to-student
subscription-based writing services business, and bartleby®, an
institutional and direct-to-student subscription-based offering
providing textbook solutions, expert questions and answers, writing
and tutoring.
Corporate Services represents unallocated shared-service costs
which include corporate level expenses and other governance
functions, including executive functions, such as accounting,
legal, treasury, information technology, and human resources.
All material intercompany accounts and transactions have been
eliminated in consolidation.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Statements of
Operations (Unaudited)
(In thousands, except per
share data)
13 weeks ended
52 weeks ended
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Restated (a)
Restated (a)
Sales:
Product sales and other
$
215,234
$
181,196
$
1,398,046
$
1,299,740
Rental income
45,597
41,582
133,354
134,150
Total sales
260,831
222,778
1,531,400
1,433,890
Cost of sales (exclusive of depreciation
and amortization expense):
Product and other cost of sales (b)
157,057
160,142
1,081,981
1,093,989
Rental cost of sales
23,563
26,734
76,659
87,240
Total cost of sales
180,620
186,876
1,158,640
1,181,229
Gross profit
80,211
35,902
372,760
252,661
Selling and administrative expenses
87,843
83,557
383,440
338,280
Depreciation and amortization expense
12,626
12,404
49,381
52,967
Impairment loss (non-cash) (b)
—
—
6,411
27,630
Restructuring and other charges (b)
(2,123
)
(49
)
944
10,678
Operating loss
(18,135
)
(60,010
)
(67,416
)
(176,894
)
Interest expense, net
2,287
2,211
10,096
8,087
Loss before income taxes
(20,422
)
(62,221
)
(77,512
)
(184,981
)
Income tax benefit
(9,466
)
(9,837
)
(8,655
)
(45,171
)
Net loss
$
(10,956
)
$
(52,384
)
$
(68,857
)
$
(139,810
)
Loss per common share:
Basic
$
(0.21
)
$
(1.02
)
$
(1.33
)
$
(2.81
)
Diluted
$
(0.21
)
$
(1.02
)
$
(1.33
)
$
(2.81
)
Weighted average common shares
outstanding:
Basic
52,046
51,379
51,797
49,669
Diluted
52,046
51,379
51,797
49,669
(a)
The Company identified certain out of
period adjustments related primarily to Income tax benefit, and
Restructuring and other charges, for the 13 and 52 weeks ended May
1, 2021. The adjustments increased our fiscal year 2021 reported
net loss by $8.0 million but did not have an impact on Adjusted
EBITDA (non-GAAP), cash flows or liquidity. Refer to Note 2.
Summary of Significant Accounting Policies to our consolidated
financial statements included in our Annual Report on Form 10-K for
the year ended April 30, 2022, which is expected to be filed on or
about June 29, 2022, for further information.
(b)
For additional information, see the Notes
in the Non-GAAP disclosure information of this Press Release.
13 weeks ended
52 weeks ended
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Restated (a)
Restated (a)
Percentage of sales:
Sales:
Product sales and other
82.5
%
81.3
%
91.3
%
90.6
%
Rental income
17.5
%
18.7
%
8.7
%
9.4
%
Total sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales (exclusive of depreciation
and amortization expense):
Product and other cost of sales (b)
73.0
%
88.4
%
77.4
%
84.2
%
Rental cost of sales (b)
51.7
%
64.3
%
57.5
%
65.0
%
Total cost of sales
69.2
%
83.9
%
75.7
%
82.4
%
Gross profit
30.8
%
16.1
%
24.3
%
17.6
%
Selling and administrative expenses
33.7
%
37.5
%
25.0
%
23.6
%
Depreciation and amortization
4.8
%
5.6
%
3.2
%
3.7
%
Impairment loss (non-cash)
—
%
—
%
0.4
%
1.9
%
Restructuring and other charges
(0.8
) %
—
%
0.1
%
0.7
%
Operating loss
(7.0
) %
(26.9
) %
(4.4
) %
(12.3
) %
Interest expense, net
0.9
%
1.0
%
0.7
%
0.6
%
Loss before income taxes
(7.8
) %
(27.9
) %
(5.1
) %
(12.9
) %
Income tax benefit
(3.6
) %
(4.4
) %
(0.6
) %
(3.2
) %
Net loss
(4.2
) %
(23.5
) %
(4.5
) %
(9.8
) %
(a)
The Company identified certain out of
period adjustments related primarily to Income tax benefit, and
Restructuring and other charges, for the 13 and 52 weeks ended May
1, 2021. The adjustments increased our fiscal year 2021 reported
net loss by $8.0 million but did not have an impact on Adjusted
EBITDA (non-GAAP), cash flows or liquidity. Refer to Note 2.
Summary of Significant Accounting Policies to our consolidated
financial statements included in our Annual Report on Form 10-K for
the year ended April 30, 2022, which is expected to be filed on or
about June 29, 2022, for further information.
(b)
Represents the percentage these costs bear
to the related sales, instead of total sales.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited) (In thousands, except per share data)
April 30, 2022
May 1, 2021
Restated (a)
ASSETS
Current assets:
Cash and cash equivalents
$
10,388
$
8,024
Receivables, net
137,039
121,072
Merchandise inventories, net
293,854
281,112
Textbook rental inventories
29,612
28,692
Prepaid expenses and other current
assets
61,709
61,933
Total current assets
532,602
500,833
Property and equipment, net
94,072
89,172
Operating lease right-of-use assets
286,584
240,456
Intangible assets, net
129,624
150,904
Goodwill
4,700
4,700
Deferred tax assets, net
—
15,943
Other noncurrent assets
23,971
29,105
Total assets
$
1,071,553
$
1,031,113
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
182,790
$
137,578
Accrued liabilities
95,387
93,589
Current operating lease liabilities
97,143
92,513
Short-term borrowings
40,000
50,000
Total current liabilities
415,320
373,680
Long-term deferred taxes, net
1,430
—
Long-term operating lease liabilities
219,594
184,780
Other long-term liabilities
21,135
52,042
Long-term borrowings
185,700
127,600
Total liabilities
843,179
738,102
Commitments and contingencies
—
—
Stockholders' equity:
Preferred stock, $0.01 par value;
authorized, 5,000 shares; issued and outstanding, none
—
—
Common stock, $0.01 par value; authorized,
200,000 shares; issued, 54,234 and 53,327 shares, respectively;
outstanding, 52,046 and 51,379 shares, respectively
542
533
Additional paid-in-capital
740,838
734,257
Accumulated deficit
(491,494
)
(422,637
)
Treasury stock, at cost
(21,512
)
(19,142
)
Total stockholders' equity
228,374
293,011
Total liabilities and stockholders'
equity
$
1,071,553
$
1,031,113
(a)
The Company identified certain out of
period adjustments related to Deferred tax assets, net and Accrued
liabilities as of May 1, 2021. The adjustments increased our fiscal
year 2021 reported net loss by $8.0 million but did not have an
impact on Adjusted EBITDA (non-GAAP), cash flows or liquidity.
Refer to Note 2. Summary of Significant Accounting Policies to our
consolidated financial statements included in our Annual Report on
Form 10-K for the year ended April 30, 2022, which is expected to
be filed on or about June 29, 2022, for further information.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Statements of
Cash Flow (Unaudited)
(In thousands, except per
share data)
52 weeks ended
April 30, 2022
May 1, 2021
Restated (a)
Cash flows from operating activities:
Net loss
$
(68,857
)
$
(139,810
)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization expense
49,381
52,967
Content amortization expense
5,454
5,034
Amortization of deferred financing
costs
1,472
1,112
Impairment loss (non-cash) (b)
6,411
27,630
Merchandise inventory loss and write-off
(b)
434
14,960
Deferred taxes
(7,961
)
(8,138
)
Stock-based compensation expense
6,333
5,095
Changes in operating lease right-of-use
assets and liabilities
(8,475
)
(4,367
)
Changes in other long-term assets and
liabilities and other, net
(2,155
)
9,251
Changes in other operating assets and
liabilities, net
20,023
69,161
Net cash flow provided by operating
activities
2,060
32,895
Cash flows from investing activities:
Purchases of property and equipment
(43,533
)
(37,223
)
Changes in other noncurrent assets and
other
872
335
Net cash flow used in investing
activities
(42,661
)
(36,888
)
Cash flows from financing activities:
Proceeds from borrowings under Credit
Agreement
632,220
722,600
Repayments of borrowings under Credit
Agreement
(584,120
)
(719,700
)
Payment of deferred financing costs
(265
)
(1,076
)
Sales of treasury shares
—
10,869
Purchase of treasury shares
(2,370
)
(894
)
Proceeds from the exercise of stock
options, net
256
—
Net cash flows provided by financing
activities
45,721
11,799
Net increase in cash, cash equivalents,
and restricted cash
5,120
7,806
Cash, cash equivalents, and restricted
cash at beginning of period
16,814
9,008
Cash, cash equivalents, and restricted
cash at end of period
$
21,934
$
16,814
Changes in other operating assets and
liabilities, net:
Receivables, net
$
(15,967
)
$
(30,221
)
Merchandise inventories
(13,176
)
132,867
Textbook rental inventories
(920
)
12,018
Prepaid expenses and other current
assets
3,112
(37,492
)
Accounts payable and accrued
liabilities
46,974
(8,011
)
Changes in other operating assets and
liabilities, net
$
20,023
$
69,161
Supplemental cash flow information:
Cash paid during the period for:
Interest paid
$
8,166
$
6,778
Income taxes paid (net of refunds)
$
(8,007
)
$
6,008
(a)
The Company identified certain out of
period adjustments related primarily to Deferred taxes, and
Restructuring and other charges, for the 52 weeks ended May 1,
2021. The adjustments increased our fiscal year 2021 reported net
loss by $8.0 million but did not have an impact on Adjusted EBITDA
(non-GAAP), cash flows or liquidity. Refer to Note 2. Summary of
Significant Accounting Policies to our consolidated financial
statements included in our Annual Report on Form 10-K for the year
ended April 30, 2022, which is expected to be filed on or about
June 29, 2022, for further information.
(b)
For additional information, see the Notes
in the Non-GAAP disclosure information of this Press Release.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
(In thousands, except
percentages)
Segment Information (a)
13 weeks ended
52 weeks ended
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Sales
Retail (b)
$
245,503
$
207,511
$
1,439,664
$
1,330,470
Wholesale
9,054
9,679
112,246
165,825
DSS
9,654
8,349
35,666
27,374
Eliminations
(3,380
)
(2,761
)
(56,176
)
(89,779
)
Total Sales
$
260,831
$
222,778
$
1,531,400
$
1,433,890
Gross Profit
Retail (c)
$
76,890
$
45,574
$
323,803
$
211,322
Wholesale
(4,347
)
(3,446
)
19,782
34,683
DSS (d)
9,494
8,195
34,996
26,607
Eliminations
(356
)
1,873
67
43
Total Gross Profit
$
81,681
$
52,196
$
378,648
$
272,655
Selling and Administrative Expenses
Retail
$
72,647
$
67,863
$
315,124
$
278,149
Wholesale
3,681
3,812
16,000
16,085
DSS
7,945
7,062
29,472
22,116
Corporate Services
3,595
4,843
23,002
22,079
Eliminations
(25
)
(23
)
(158
)
(149
)
Total Selling and Administrative
Expenses
$
87,843
$
83,557
$
383,440
$
338,280
Segment Adjusted EBITDA (Non-GAAP) (e)
Retail
$
4,243
$
(22,289
)
$
8,679
$
(66,827
)
Wholesale
(8,028
)
(7,258
)
3,782
18,598
DSS
1,549
1,133
5,524
4,491
Corporate Services
(3,595
)
(4,843
)
(23,002
)
(22,079
)
Eliminations
(331
)
1,896
225
192
Total Segment Adjusted EBITDA
(Non-GAAP)
$
(6,162
)
$
(31,361
)
$
(4,792
)
$
(65,625
)
Percentage of Segment Sales
Gross Profit
Retail (c)
31.3
%
22.0
%
22.5
%
15.9
%
Wholesale
(48.0
) %
(35.6
) %
17.6
%
20.9
%
DSS (d)
98.3
%
98.2
%
98.1
%
97.2
%
Eliminations
N/A
N/A
N/A
N/A
Total Gross Profit
31.3
%
23.4
%
24.7
%
19.0
%
Selling and Administrative Expenses
Retail
29.6
%
32.7
%
21.9
%
20.9
%
Wholesale
40.7
%
39.4
%
14.3
%
9.7
%
DSS
82.3
%
84.6
%
82.6
%
80.8
%
Corporate Services
N/A
N/A
N/A
N/A
Eliminations
N/A
N/A
N/A
N/A
Total Selling and Administrative
Expenses
33.7
%
37.5
%
25.0
%
23.6
%
(a)
See Explanatory Note in this Press Release
for Segment descriptions.
(b)
In December 2020, we entered into
merchandising partnership with Fanatics Retail Group Fulfillment,
LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”)
(collectively referred to herein as the “FLC Partnership”).
Effective April 4, 2021, as contemplated by the FLC Partnership's
merchandising agreement and e-commerce agreement, we began to
transition the fulfillment of logo and emblematic general
merchandise sales to FLC and Fanatics. As the logo and emblematic
general merchandise sales are fulfilled by FLC and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo and emblematic sales on a gross basis in the
periods prior to April 4, 2021. For Retail Gross Comparable Store
Sales details, see the Sales Information disclosure of this Press
Release.
(c)
For the 13 and 52 weeks ended April 30,
2022, gross margin excludes a merchandise inventory loss of $434 in
the Retail Segment related to the final sale of our logo and
emblematic general merchandise inventory to FLC discussed below.
Additionally, gross margin for the Retail Segment excludes
amortization expense (non-cash) related to content development
costs of $36 and $386 for the 13 and 52 weeks ended April 30, 2022,
respectively, and $167 and $745 for the 13 and 52 weeks ended May
1, 2021, respectively.
For the 13 and 52 weeks ended May 1, 2021,
gross margin excludes a merchandise inventory loss and write-off of
$14,960 in the Retail Segment, comprised of a loss of $10,262
related to the sale of our logo and emblematic general merchandise
inventory below cost to FLC and an inventory write-off of $4,698
related to our initiative to exit certain product offerings and
streamline/rationalize our overall non-logo general merchandise
product assortment resulting from the centralization of our
merchandising decision-making during the year.
(d)
Gross margin for the DSS Segment excludes
amortization expense (non-cash) related to content development
costs of $1,434 and $5,068 for the 13 and 52 weeks ended April 30,
2022, respectively, and $1,167 and $4,289 for the 13 and 52 weeks
ended May 1, 2021, respectively.
(e)
For additional information, including a
reconciliation to the most comparable financial measures presented
in accordance with GAAP, see "Non-GAAP Information" and "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Sales Information
(Unaudited)
Total Sales
The components of the sales variances for
the 13 and 52 week periods are as follows:
Dollars in millions
13 weeks
52 weeks
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Retail Sales
New stores (a) (b)
$
14.2
$
6.1
$
67.2
$
64.2
Closed stores (a)
(7.1
)
(2.9
)
(42.3
)
(35.4
)
Comparable stores (b)
26.6
(20.1
)
83.5
(409.2
)
Textbook rental deferral
6.3
(15.0
)
(1.8
)
(3.3
)
Service revenue (c)
(0.4
)
1.1
(2.4
)
(0.7
)
Other (d)
(1.6
)
(0.2
)
5.0
2.0
Retail Sales subtotal:
$
38.0
$
(31.0
)
$
109.2
$
(382.4
)
Wholesale Sales
$
(0.6
)
$
(9.1
)
$
(53.6
)
$
(32.5
)
DSS Sales
$
1.3
$
1.7
$
8.3
$
3.7
Eliminations (e)
$
(0.7
)
$
4.3
$
33.6
$
(6.0
)
Total sales variance
$
38.0
$
(34.1
)
$
97.5
$
(417.2
)
(a) The following is a store count summary
for physical stores and virtual stores:
13 weeks ended
52 weeks ended
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Number of Stores:
Physical Stores
Virtual Stores
Physical Stores
Virtual Stores
Physical Stores
Virtual Stores
Physical Stores
Virtual Stores
Number of stores at beginning of
period
799
642
765
676
769
648
772
647
Stores opened
10
—
8
—
57
35
40
58
Stores closed
4
20
4
28
21
61
43
57
Number of stores at
end of period
805
622
769
648
805
622
769
648
(b)
In December 2020, we entered into
merchandising partnership with Fanatics Retail Group Fulfillment,
LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”)
(collectively referred to herein as the “FLC Partnership”).
Effective April 4, 2021, as contemplated by the FLC Partnership's
merchandising agreement and e-commerce agreement, we began to
transition the fulfillment of logo and emblematic general
merchandise sales to FLC and Fanatics. As the logo and emblematic
general merchandise sales are fulfilled by FLC and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo and emblematic sales on a gross basis in the
periods prior to April 4, 2021. For Retail Gross Comparable Store
Sales details, see below.
(c)
Service revenue includes brand
partnerships, shipping and handling, and revenue from other
programs.
(d)
Other includes inventory liquidation sales
to third parties, marketplace sales and certain accounting
adjusting items related to return reserves, and other deferred
items.
(e)
Eliminates Wholesale sales and service
fees to Retail and Retail commissions earned from Wholesale.
Retail Gross Comparable Store Sales
Retail Gross Comparable Store Sales variances by category are as
follows:
Dollars in millions
13 weeks
52 weeks
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Textbooks (Course Materials)
$
3.5
4.0
%
$
(17.1
)
(17.9
)%
$
21.2
2.3
%
$
(158.4
)
(15.2
) %
General Merchandise
49.8
63.2
%
6.9
9.6
%
212.5
76.1
%
(235.3
)
(45.9
) %
Trade Books
2.0
67.8
%
(1.5
)
(33.2
)%
7.0
63.0
%
(20.9
)
(64.3
) %
Total Retail Gross Comparable Store
Sales
$
55.3
32.6
%
$
(11.7
)
(6.9
)%
$
240.7
19.6
%
$
(414.6
)
(26.1
) %
To supplement the Total Sales table presented above, the Company
uses Retail Gross Comparable Store Sales as a key performance
indicator. Retail Gross Comparable Store Sales includes sales from
physical and virtual stores that have been open for an entire
fiscal year period and does not include sales from permanently
closed stores for all periods presented. For Retail Gross
Comparable Store Sales, sales for logo and emblematic general
merchandise fulfilled by FLC, Fanatics and digital agency sales are
included on a gross basis for consistent year-over-year
comparison.
Effective April 4, 2021, as contemplated by the FLC
Partnership's merchandising agreement and e-commerce agreement, we
began to transition the fulfillment of logo and emblematic general
merchandise sales to FLC and Fanatics. As the logo and emblematic
general merchandise sales are fulfilled by FLC and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo and emblematic sales on a gross basis in the
periods prior to April 4, 2021.
We believe the current Retail Gross Comparable Store Sales
calculation method reflects management’s view that such comparable
store sales are an important measure of the growth in sales when
evaluating how established stores have performed over time. We
present this metric as additional useful information about the
Company’s operational and financial performance and to allow
greater transparency with respect to important metrics used by
management for operating and financial decision-making. Retail
Gross Comparable Store Sales are also referred to as "same-store"
sales by others within the retail industry and the method of
calculating comparable store sales varies across the retail
industry. As a result, our calculation of comparable store sales is
not necessarily comparable to similarly titled measures reported by
other companies and is intended only as supplemental information
and is not a substitute for net sales presented in accordance with
GAAP.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Non-GAAP Information (a)
(Unaudited)
(In thousands)
Consolidated Adjusted Earnings (non-GAAP) (a)
13 weeks ended
52 weeks ended
Restated (b)
Restated (b)
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Net loss
$
(10,956
)
$
(52,384
)
$
(68,857
)
$
(139,810
)
Reconciling items, after-tax (below)
(653
)
12,074
13,243
43,287
Adjusted Earnings (Non-GAAP)
$
(11,609
)
$
(40,310
)
$
(55,614
)
$
(96,523
)
Reconciling items, pre-tax
Impairment loss (non-cash) (c)
$
—
$
—
$
6,411
$
27,630
Merchandise inventory loss and write-off
(d)
—
14,960
434
14,960
Content amortization (non-cash) (e)
1,470
1,334
5,454
5,034
Restructuring and other charges (f)
(2,123
)
(49
)
944
10,678
Reconciling items, pre-tax
(653
)
16,245
13,243
58,302
Less: Pro forma income tax impact (g)
—
4,171
—
15,015
Reconciling items, after-tax
$
(653
)
$
12,074
$
13,243
$
43,287
13 weeks ended
52 weeks ended
Restated (b)
Restated (b)
Consolidated Adjusted EBITDA (non-GAAP)
(a)
April 30, 2022
May 1, 2021
April 30, 2022
May 1, 2021
Net loss
$
(10,956
)
$
(52,384
)
$
(68,857
)
$
(139,810
)
Add:
Depreciation and amortization expense
12,626
12,404
49,381
52,967
Interest expense, net
2,287
2,211
10,096
8,087
Income tax expense benefit
(9,466
)
(9,837
)
(8,655
)
(45,171
)
Impairment loss (non-cash) (c)
—
—
6,411
27,630
Merchandise inventory loss and write-off
(d)
—
14,960
434
14,960
Content amortization (non-cash) (e)
1,470
1,334
5,454
5,034
Restructuring and other charges (f)
(2,123
)
(49
)
944
10,678
Adjusted EBITDA (Non-GAAP)
$
(6,162
)
$
(31,361
)
$
(4,792
)
$
(65,625
)
Adjusted EBITDA by Segment (non-GAAP) (a)
The following is Adjusted EBITDA by Segment for the 13 and 52
week periods:
13 weeks ended April 30, 2022
Retail
Wholesale
DSS
Corporate Services (h)
Eliminations
Total
Net loss
$
(5,418
)
$
(7,255
)
$
(1,515
)
$
3,563
$
(331
)
$
(10,956
)
Add:
Depreciation and amortization expense
9,620
1,358
1,630
18
—
12,626
Interest expense, net
—
—
—
2,287
—
2,287
Income tax benefit
—
—
—
(9,466
)
—
(9,466
)
Impairment loss (non-cash) (c)
—
—
—
—
—
—
Merchandise inventory loss and write-off
(d)
—
—
—
—
—
—
Content amortization (non-cash) (e)
36
—
1,434
—
—
1,470
Restructuring and other charges (f)
5
(2,131
)
—
3
—
(2,123
)
Adjusted EBITDA (non-GAAP)
$
4,243
$
(8,028
)
$
1,549
$
(3,595
)
$
(331
)
$
(6,162
)
13 weeks ended May 1, 2021 -
Restated (b)
Retail
Wholesale
DSS
Corporate Services (h)
Eliminations
Total
Net (loss) income
$
(47,570
)
$
(6,893
)
$
(1,914
)
$
2,097
$
1,896
$
(52,384
)
Add:
Depreciation and amortization expense
9,273
1,230
1,880
21
—
12,404
Interest expense, net
—
—
—
2,211
—
2,211
Income tax benefit
—
—
—
(9,837
)
—
(9,837
)
Impairment loss (non-cash) (c)
—
—
—
—
—
—
Merchandise inventory loss and write-off
(d)
14,960
—
—
—
—
14,960
Content amortization (non-cash) (e)
167
—
1,167
—
—
1,334
Restructuring and other charges (f)
881
(1,595
)
—
665
—
(49
)
Adjusted EBITDA (non-GAAP)
$
(22,289
)
$
(7,258
)
$
1,133
$
(4,843
)
$
1,896
$
(31,361
)
52 weeks ended April 30, 2022
Retail
Wholesale
DSS
Corporate Services (h)
Eliminations
Total
Net (loss) income
$
(37,305
)
$
495
$
(6,801
)
$
(25,471
)
$
225
$
(68,857
)
Add:
Depreciation and amortization expense
36,635
5,418
7,257
71
—
49,381
Interest expense, net
—
—
—
10,096
—
10,096
Income tax benefit
—
—
—
(8,655
)
—
(8,655
)
Impairment loss (non-cash) (c)
6,411
—
—
—
—
6,411
Merchandise inventory loss and write-off
(d)
434
—
—
—
—
434
Content amortization (non-cash) (e)
386
—
5,068
—
—
5,454
Restructuring and other charges (f)
2,118
(2,131
)
—
957
—
944
Adjusted EBITDA (non-GAAP)
$
8,679
$
3,782
$
5,524
$
(23,002
)
$
225
$
(4,792
)
52 weeks ended May 1, 2021 -
Restated (b)
Retail
Wholesale
DSS
Corporate Services (h)
Eliminations
Total
Net (loss) income
$
(155,310
)
$
14,732
$
(8,132
)
$
8,708
$
192
$
(139,810
)
Add:
Depreciation and amortization expense
39,634
5,461
7,763
109
—
52,967
Interest expense, net
—
—
—
8,087
—
8,087
Income tax benefit
—
—
—
(45,171
)
—
(45,171
)
Impairment loss (non-cash) (c)
27,630
—
—
—
—
27,630
Merchandise inventory loss and write-off
(d)
14,960
—
—
—
—
14,960
Content amortization (non-cash) (e)
745
—
4,289
—
—
5,034
Restructuring and other charges (f)
5,514
(1,595
)
571
6,188
—
10,678
Adjusted EBITDA (non-GAAP)
$
(66,827
)
$
18,598
$
4,491
$
(22,079
)
$
192
$
(65,625
)
(a)
For additional information, see "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
(b)
The Company identified certain out of
period adjustments related primarily to Income tax benefit, and
Restructuring and other charges, for the 13 and 52 weeks ended May
1, 2021. The adjustments increased our fiscal year 2021 reported
net loss by $8.0 million but did not have an impact on Adjusted
EBITDA (non-GAAP), cash flows or liquidity. Refer to Note 2.
Summary of Significant Accounting Policies to our consolidated
financial statements included in our Annual Report on Form 10-K for
the year ended April 30, 2022, which is expected to be filed on or
about June 29, 2022, for further information.
(c)
During the 52 weeks ended April 30, 2022,
we evaluated certain of our store-level long-lived assets in the
Retail segment for impairment. Based on the results of the
impairment tests, we recognized an impairment loss (non-cash) of
$6,411 (both pre-tax and after-tax) comprised of $739 $1,793,
$3,668 and $211 of property and equipment, operating lease
right-of-use assets, amortizable intangibles, and other noncurrent
assets, respectively.
During the 52 weeks ended May 1, 2021, we
evaluated certain of our store-level long-lived assets in the
Retail segment for impairment. Based on the results of the
impairment tests, we recognized an impairment loss (non-cash) of
$27,630, $20,506 after-tax, comprised of $5,085, $13,328, $6,278
and $2,939 million of property and equipment, operating lease
right-of-use assets, amortizable intangibles, and other noncurrent
assets, respectively.
(d)
As contemplated by the FLC Partnership's
merchandising agreement, we sold our logo and emblematic general
merchandise inventory to FLC and received proceeds of $41,773, and
recognized a merchandise inventory loss on the sale of $10,262 in
cost of goods sold during the 52 weeks ended May 1, 2021 for the
Retail Segment. The final inventory sale price was determined
during the first quarter of Fiscal 2022, at which time, we received
additional proceeds of $1,906, and recognized a merchandise
inventory loss on the sale of $434 in cost of goods sold for the
Retail Segment.
During the 52 weeks ended May 1, 2021, we
recognized a merchandise inventory write-off of $4,698 for the
Retail Segment related to our initiative to exit certain product
offerings and streamline/rationalize our overall non-logo general
merchandise product assortment resulting from the centralization of
our merchandising decision-making during the year.
(e)
Represents amortization of content
development costs (non-cash) recorded in cost of goods sold in the
consolidated financial statements.
(f)
During the 52 weeks ended April 30, 2022
and May 1, 2021, we recognized restructuring and other charges
totaling $1,662 and $9,960, respectively, comprised primarily of
severance and other employee termination and benefit costs
associated with the elimination of various positions as part of
cost reduction objectives, and professional service costs for
restructuring, process improvements, and actuarial gain related to
a frozen retirement benefit plan (non-cash), shareholder activist
activities, and costs related to development and integration
associated with the FLC Partnership.
(g)
Represents the income tax effects of the
non-GAAP items.
(h)
Interest expense is reflected in Corporate
Services as it is primarily related to our Credit Agreement which
funds our operating and financing needs across the organization.
Income taxes are reflected in Corporate Services as we record our
income tax provision on a consolidated basis.
Free Cash Flow (non-GAAP) (a)
52 weeks ended
April 30, 2022
May 1, 2021
Net cash flows provided by operating
activities
$
2,060
$
32,895
Less:
Capital expenditures (b)
43,533
37,223
Cash interest paid
8,166
6,778
Cash taxes (refund) paid
(8,007
)
6,008
Free Cash Flow (non-GAAP)
$
(41,632
)
$
(17,114
)
(a)
For additional information, see "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
(b)
Purchases of property and equipment are
also referred to as capital expenditures. Our investing activities
consist principally of capital expenditures for contractual capital
investments associated with renewing existing contracts, new store
construction, digital initiatives and enhancements to internal
systems and our website. The following table provides the
components of total purchases of property and equipment:
Capital Expenditures
52 weeks ended
April 30, 2022
May 1, 2021
Physical store capital expenditures
$
16,206
$
10,382
Product and system development
15,453
11,747
Content development costs
9,340
8,741
Other
2,534
6,353
Total Capital Expenditures
$
43,533
$
37,223
Use of Non-GAAP Financial Information -
Adjusted Earnings, Adjusted EBITDA, Adjusted EBITDA by Segment, and
Free Cash Flow
To supplement the Company’s consolidated
financial statements presented in accordance with generally
accepted accounting principles (“GAAP”), in the Press Release
attached hereto as Exhibit 99.1, the Company uses the financial
measures of Adjusted Earnings, Adjusted EBITDA, Adjusted EBITDA by
Segment and Free Cash Flow, which are non-GAAP financial measures
under Securities and Exchange Commission (the "SEC") regulations.
We define Adjusted Earnings as net income (loss) adjusted for
certain reconciling items that are subtracted from or added to net
income (loss). We define Adjusted EBITDA as net income (loss) plus
(1) depreciation and amortization; (2) interest expense and (3)
income taxes, (4) as adjusted for items that are subtracted from or
added to net income (loss). We define Free Cash Flow as Cash Flows
from Operating Activities less capital expenditures, cash interest
and cash taxes.
The non-GAAP measures included in the
Press Release have been reconciled to the most comparable financial
measures presented in accordance with GAAP, attached hereto as
Exhibit 99.1, as follows: the reconciliation of Adjusted Earnings
to net income (loss); the reconciliation of consolidated Adjusted
EBITDA to consolidated net income (loss); and the reconciliation of
Adjusted EBITDA by Segment to net income (loss) by segment. All of
the items included in the reconciliations are either (i) non-cash
items or (ii) items that management does not consider in assessing
our on-going operating performance.
These non-GAAP financial measures are not
intended as substitutes for and should not be considered superior
to measures of financial performance prepared in accordance with
GAAP. In addition, the Company's use of these non-GAAP financial
measures may be different from similarly named measures used by
other companies, limiting their usefulness for comparison
purposes.
We review these non-GAAP financial
measures as internal measures to evaluate our performance at a
consolidated level and at a segment level and manage our
operations. We believe that these measures are useful performance
measures which are used by us to facilitate a comparison of our
on-going operating performance on a consistent basis from
period-to-period. We believe that these non-GAAP financial measures
provide for a more complete understanding of factors and trends
affecting our business than measures under GAAP can provide alone,
as they exclude certain items that management believes do not
reflect the ordinary performance of our operations in a particular
period. Our Board of Directors and management also use Adjusted
EBITDA and Adjusted EBITDA by Segment, at a consolidated level and
at a segment level, as one of the primary methods for planning and
forecasting expected performance, for evaluating on a quarterly and
annual basis actual results against such expectations, and as a
measure for performance incentive plans. Management also uses
Adjusted EBITDA by Segment to determine segment capital
allocations. We believe that the inclusion of Adjusted Earnings,
Adjusted EBITDA, and Adjusted EBITDA by Segment results provides
investors useful and important information regarding our operating
results, in a manner that is consistent with management’s
evaluation of business performance. We believe that Free Cash Flow
provides useful additional information concerning cash flow
available to meet future debt service obligations and working
capital requirements and assists investors in their understanding
of our operating profitability and liquidity as we manage the
business to maximize margin and cash flow.
The Company urges investors to carefully
review the GAAP financial information included as part of the
Company’s Form 10-K dated April 30, 2022 expected to be filed with
the SEC on June 29, 2022, which includes consolidated financial
statements for each of the three years for the period ended April
30, 2022, May 1, 2021, and May 2, 2020 (Fiscal 2022, Fiscal 2021,
and Fiscal 2020, respectively) and the Company's Quarterly Reports
on Form 10-Q for the period ended July 31, 2021 filed with the SEC
on September 2, 2021, the Company's Quarterly Report on Form 10-Q
for the period ended October 30, 2021 filed with the SEC on
November 30, 2021, and the Company's Quarterly Report on Form 10-Q
for the period ended January 29, 2022 filed with the SEC on March
8, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220629005105/en/
Media Contact: Carolyn J.
Brown Senior Vice President Corporate Communications & Public
Affairs 908-991-2967 cbrown@bned.com
Investor Contact: Andy
Milevoj Vice President Corporate Finance and Investor Relations
908-991-2776 amilevoj@bned.com
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