2021 Q4 Form 10-Q Financial Statement

#000163411721000123 Filed on November 30, 2021

View on sec.gov

Income Statement

Concept 2021 Q4 2020 Q4
Revenue $627.0M $595.5M
YoY Change 5.29% -22.89%
Cost Of Revenue $481.4M $480.2M
YoY Change 0.25% -17.95%
Gross Profit $145.6M $115.3M
YoY Change 26.26% -38.33%
Gross Profit Margin 23.22% 19.36%
Selling, General & Admin $107.9M $91.97M
YoY Change 17.32% -18.9%
% of Gross Profit 74.13% 79.78%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $13.26M $14.40M
YoY Change -7.9% -12.73%
% of Gross Profit 9.11% 12.49%
Operating Expenses $107.9M $91.97M
YoY Change 17.32% -18.9%
Operating Profit $24.59M $6.733M
YoY Change 265.2% -88.07%
Interest Expense -$2.264M -$900.0K
YoY Change 151.56% -35.71%
% of Operating Profit -9.21% -13.37%
Other Income/Expense, Net
YoY Change
Pretax Income $22.33M $5.821M
YoY Change 283.53% -89.41%
Income Tax -$203.0K -$1.694M
% Of Pretax Income -0.91% -29.1%
Net Earnings $22.53M $7.515M
YoY Change 199.77% -79.08%
Net Earnings / Revenue 3.59% 1.26%
Basic Earnings Per Share $0.43 $0.15
Diluted Earnings Per Share $0.41 $0.15
COMMON SHARES
Basic Shares Outstanding 51.67M shares 48.80M shares
Diluted Shares Outstanding 54.57M shares 49.43M shares

Balance Sheet

Concept 2021 Q4 2020 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $11.00M $7.400M
YoY Change 48.59% -69.92%
Cash & Equivalents $11.00M $7.353M
Short-Term Investments
Other Short-Term Assets $68.97M $23.80M
YoY Change 189.77% 28.65%
Inventory $370.5M $457.7M
Prepaid Expenses
Receivables $218.1M $167.5M
Other Receivables $0.00 $0.00
Total Short-Term Assets $719.2M $707.0M
YoY Change 1.72% -5.63%
LONG-TERM ASSETS
Property, Plant & Equipment $91.88M $93.13M
YoY Change -1.35% -11.44%
Goodwill $4.700M $4.700M
YoY Change 0.0% 0.0%
Intangibles $141.8M $166.1M
YoY Change -14.62% -9.8%
Long-Term Investments
YoY Change
Other Assets $26.01M $31.73M
YoY Change -18.04% -19.12%
Total Long-Term Assets $533.0M $590.0M
YoY Change -9.65% -6.51%
TOTAL ASSETS
Total Short-Term Assets $719.2M $707.0M
Total Long-Term Assets $533.0M $590.0M
Total Assets $1.252B $1.297B
YoY Change -3.45% -6.03%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $333.1M $314.0M
YoY Change 6.07% -19.0%
Accrued Expenses $122.7M $134.2M
YoY Change -8.53% -31.96%
Deferred Revenue $32.84M
YoY Change -32.96%
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $0.00 $0.00
YoY Change
Total Short-Term Liabilities $574.3M $569.7M
YoY Change 0.79% -17.74%
LONG-TERM LIABILITIES
Long-Term Debt $183.3M $99.50M
YoY Change 84.22%
Other Long-Term Liabilities $51.11M $48.33M
YoY Change 5.76% -4.63%
Total Long-Term Liabilities $51.11M $48.33M
YoY Change 5.76% -4.63%
TOTAL LIABILITIES
Total Short-Term Liabilities $574.3M $569.7M
Total Long-Term Liabilities $51.11M $48.33M
Total Liabilities $980.0M $916.6M
YoY Change 6.92% -0.69%
SHAREHOLDERS EQUITY
Retained Earnings -$443.7M -$322.0M
YoY Change 37.82% 33.71%
Common Stock $736.9M $736.2M
YoY Change 0.1% 0.71%
Preferred Stock
YoY Change
Treasury Stock (at cost) $21.50M $33.78M
YoY Change -36.35% 2.68%
Treasury Stock Shares 4.252M shares
Shareholders Equity $272.2M $380.4M
YoY Change
Total Liabilities & Shareholders Equity $1.252B $1.297B
YoY Change -3.45% -6.03%

Cashflow Statement

Concept 2021 Q4 2020 Q4
OPERATING ACTIVITIES
Net Income $22.53M $7.515M
YoY Change 199.77% -79.08%
Depreciation, Depletion And Amortization $13.26M $14.40M
YoY Change -7.9% -12.73%
Cash From Operating Activities $41.60M $142.9M
YoY Change -70.89% -29.12%
INVESTING ACTIVITIES
Capital Expenditures -$9.894M -$9.100M
YoY Change 8.73% -17.27%
Acquisitions
YoY Change
Other Investing Activities $110.0K $1.600M
YoY Change -93.13% 60.0%
Cash From Investing Activities -$9.784M -$7.500M
YoY Change 30.45% -25.0%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -21.51M -135.6M
YoY Change -84.14% -22.69%
NET CHANGE
Cash From Operating Activities 41.60M 142.9M
Cash From Investing Activities -9.784M -7.500M
Cash From Financing Activities -21.51M -135.6M
Net Change In Cash 10.31M -200.0K
YoY Change -5256.5% -101.23%
FREE CASH FLOW
Cash From Operating Activities $41.60M $142.9M
Capital Expenditures -$9.894M -$9.100M
Free Cash Flow $51.50M $152.0M
YoY Change -66.12% -28.5%

Facts In Submission

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<div style="margin-top:12pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Note 1. </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%;text-decoration:underline">Organization</span></div><div style="margin-top:6pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Description of Business</span></div><div style="margin-top:6pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Barnes &amp; Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate 1,445 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance. </span></div><div style="margin-top:6pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships. We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the “FLC Partnership”. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.</span></div><div style="margin-top:6pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">We believe the </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Barnes &amp; Noble</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> brand (licensed from our former parent) along with our subsidiary brands, </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">BNC </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">and </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">MBS,</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business. </span></div><div style="margin-top:6pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">We have three reportable segments: Retail, Wholesale and DSS. For additional information related to our strategies, operations and segments, see</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> Part I - Item 1. Business </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> </span></div><div style="margin-top:6pt;text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Partnership with Fanatics and FLC</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%"> </span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In December 2020, we entered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business. Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments. </span></div><div style="margin-top:5pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:115%">We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores. We also work closely with our campus partners to ensure that each campus store </span></div><div style="margin-top:5pt;text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:115%">maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores. </span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. 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. For additional information, see </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">and</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> Note 6. Equity and Earnings Per Share </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.</span></div><div style="margin-top:3pt;text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">COVID-19 Business Impact</span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Since the fourth quarter of Fiscal 2020, our business has been significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations</span><span style="color:#212529;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings. </span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The COVID-19 impact on higher education remains a fluid situation, and we are committed to supporting our campus partners through our flexible offerings and our ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to how to operate our bookstores in the safest manner for our employees and customers. Please see our </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Part II - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> for further discussion.</span></div>
CY2021Q4 us-gaap Number Of Stores
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us-gaap Basis Of Accounting
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<div style="margin-top:3pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Basis of Presentation and Consolidation</span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. </span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 26 weeks ended October 30, 2021 are not indicative of the results expected for the 52 weeks ending April 30, 2022 (Fiscal 2022). </span></div><div style="margin-top:3pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution. Our DSS segment sales and operating profit are realized relatively consistently throughout the year.</span></div>
us-gaap Use Of Estimates
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<div style="margin-top:9pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Use of Estimates</span></div><div style="margin-top:6pt;text-align:justify;text-indent:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</span></div>
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us-gaap Gross Profit
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us-gaap Depreciation And Amortization
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CY2021Q4 us-gaap Net Income Loss Attributable To Parent Diluted
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us-gaap Repayments Of Lines Of Credit
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us-gaap Variable Lease Cost
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CY2021Q4 us-gaap Lease Cost
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CY2020Q4 us-gaap Lease Cost
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us-gaap Lease Cost
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CY2021Q4 us-gaap Lessee Operating Lease Liability Payments Due Year Two
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CY2021Q4 us-gaap Lessee Operating Lease Liability Payments Due
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CY2021Q4 us-gaap Operating Lease Liability
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CY2021Q4 us-gaap Income Tax Expense Benefit
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0.298

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