2022 Q1 Form 10-Q Financial Statement

#000163411722000020 Filed on March 08, 2022

View on sec.gov

Income Statement

Concept 2022 Q1 2021 Q4 2021 Q1
Revenue $402.8M $627.0M $411.6M
YoY Change -2.14% 5.29% -18.05%
Cost Of Revenue $315.8M $481.4M $341.0M
YoY Change -7.38% 0.25% -11.14%
Gross Profit $86.96M $145.6M $70.61M
YoY Change 23.15% 26.26% -40.43%
Gross Profit Margin 21.59% 23.22% 17.15%
Selling, General & Admin $101.5M $107.9M $92.71M
YoY Change 9.44% 17.32% -12.69%
% of Gross Profit 116.67% 74.13% 131.29%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $13.58M $13.26M $14.70M
YoY Change -7.64% -7.9% -9.26%
% of Gross Profit 15.61% 9.11% 20.82%
Operating Expenses $101.5M $107.9M $92.71M
YoY Change 9.44% 17.32% -12.69%
Operating Profit -$33.14M $24.59M -$64.70M
YoY Change -48.79% 265.2% 2077.79%
Interest Expense -$3.051M -$2.264M -$2.300M
YoY Change 32.65% 151.56% 21.05%
% of Operating Profit -9.21%
Other Income/Expense, Net
YoY Change
Pretax Income -$36.19M $22.33M -$67.01M
YoY Change -46.0% 283.53% 1274.63%
Income Tax $615.0K -$203.0K -$18.72M
% Of Pretax Income -0.91%
Net Earnings -$36.80M $22.53M -$48.29M
YoY Change -23.79% 199.77% 2752.27%
Net Earnings / Revenue -9.14% 3.59% -11.73%
Basic Earnings Per Share -$0.71 $0.43 -$0.96
Diluted Earnings Per Share -$0.71 $0.41 -$0.96
COMMON SHARES
Basic Shares Outstanding 52.05M shares 51.67M shares 50.08M shares
Diluted Shares Outstanding 52.00M shares 54.57M shares 50.08M shares

Balance Sheet

Concept 2022 Q1 2021 Q4 2021 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $9.967M $11.00M $9.900M
YoY Change 0.68% 48.59% 1.02%
Cash & Equivalents $9.967M $11.00M $9.915M
Short-Term Investments
Other Short-Term Assets $60.62M $68.97M $25.30M
YoY Change 139.58% 189.77% 2.85%
Inventory $403.6M $370.5M $452.6M
Prepaid Expenses
Receivables $250.2M $218.1M $227.2M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $765.4M $719.2M $755.7M
YoY Change 1.28% 1.72% -11.22%
LONG-TERM ASSETS
Property, Plant & Equipment $93.75M $91.88M $87.41M
YoY Change 7.26% -1.35% -13.51%
Goodwill $4.700M $4.700M $4.700M
YoY Change 0.0% 0.0% 0.0%
Intangibles $134.0M $141.8M $155.5M
YoY Change -13.86% -14.62% -13.4%
Long-Term Investments
YoY Change
Other Assets $24.04M $26.01M $27.20M
YoY Change -11.6% -18.04% -26.83%
Total Long-Term Assets $501.3M $533.0M $532.8M
YoY Change -5.9% -9.65% -7.65%
TOTAL ASSETS
Total Short-Term Assets $765.4M $719.2M $755.7M
Total Long-Term Assets $501.3M $533.0M $532.8M
Total Assets $1.267B $1.252B $1.288B
YoY Change -1.69% -3.45% -9.78%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $359.7M $333.1M $318.8M
YoY Change 12.84% 6.07% -18.06%
Accrued Expenses $150.8M $122.7M $125.8M
YoY Change 19.82% -8.53% -35.05%
Deferred Revenue $211.0K $175.0K
YoY Change 20.57% -99.71%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $0.00 $0.00 $0.00
YoY Change
Total Short-Term Liabilities $611.3M $574.3M $550.2M
YoY Change 11.09% 0.79% -19.67%
LONG-TERM LIABILITIES
Long-Term Debt $200.4M $183.3M $150.8M
YoY Change 32.89% 84.22% 128.83%
Other Long-Term Liabilities $48.68M $51.11M $52.81M
YoY Change -7.84% 5.76% 4.52%
Total Long-Term Liabilities $48.68M $51.11M $52.81M
YoY Change -7.84% 5.76% 4.52%
TOTAL LIABILITIES
Total Short-Term Liabilities $611.3M $574.3M $550.2M
Total Long-Term Liabilities $48.68M $51.11M $52.81M
Total Liabilities $1.029B $980.0M $944.3M
YoY Change 9.0% 6.92% -2.72%
SHAREHOLDERS EQUITY
Retained Earnings -$480.5M -$443.7M -$370.3M
YoY Change 29.79% 37.82% 52.69%
Common Stock $739.0M $736.9M $733.6M
YoY Change 0.74% 0.1% 0.1%
Preferred Stock
YoY Change
Treasury Stock (at cost) $21.51M $21.50M $19.14M
YoY Change 12.38% -36.35% -41.82%
Treasury Stock Shares 2.188M shares 1.948M shares
Shareholders Equity $237.5M $272.2M $344.2M
YoY Change
Total Liabilities & Shareholders Equity $1.267B $1.252B $1.288B
YoY Change -1.69% -3.45% -9.78%

Cashflow Statement

Concept 2022 Q1 2021 Q4 2021 Q1
OPERATING ACTIVITIES
Net Income -$36.80M $22.53M -$48.29M
YoY Change -23.79% 199.77% 2752.27%
Depreciation, Depletion And Amortization $13.58M $13.26M $14.70M
YoY Change -7.64% -7.9% -9.26%
Cash From Operating Activities -$16.24M $41.60M -$46.50M
YoY Change -65.07% -70.89% -33.0%
INVESTING ACTIVITIES
Capital Expenditures -$12.13M -$9.894M -$9.700M
YoY Change 25.04% 8.73% 29.33%
Acquisitions
YoY Change
Other Investing Activities $274.0K $110.0K -$3.300M
YoY Change -108.3% -93.13% -10.81%
Cash From Investing Activities -$11.86M -$9.784M -$13.00M
YoY Change -8.81% 30.45% 16.07%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $15.00M
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 17.31M -21.51M 62.20M
YoY Change -72.17% -84.14% -5.61%
NET CHANGE
Cash From Operating Activities -16.24M 41.60M -46.50M
Cash From Investing Activities -11.86M -9.784M -13.00M
Cash From Financing Activities 17.31M -21.51M 62.20M
Net Change In Cash -10.79M 10.31M 2.700M
YoY Change -499.56% -5256.5% -118.37%
FREE CASH FLOW
Cash From Operating Activities -$16.24M $41.60M -$46.50M
Capital Expenditures -$12.13M -$9.894M -$9.700M
Free Cash Flow -$4.112M $51.50M -$36.80M
YoY Change -88.83% -66.12% -40.55%

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 1,441 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 Lids (FLC's parent company), 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 variants, on enrollments, campus activities, 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 returned to a traditional on-campus environment for learning in the Fall semester, as well as hosted traditional on campus sporting activities, 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: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%">As we entered the Spring rush period in early January 2022, we continued to experience the ongoing effects of COVID-19 with the surge of the Omicron variant further impacting students return to campus and on-campus activities. In early January, while the majority of schools brought students back to campus, some schools chose to conduct classes virtually for the beginning of the semester, while other schools chose to delay their start dates (and some schools both delayed the start of the semester and started classes virtually), thus reducing and/or delaying sales later into the quarter or shifting some sales to our fourth quarter. </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 COVID-19 impact on higher education remains a fluid situation. 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>
CY2022Q1 us-gaap Number Of Stores
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bned Number Of Students
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6000000 Person
us-gaap Number Of Reportable Segments
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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. </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-weight:400;line-height:120%">Due to the seasonal nature of the business, the results of operations for the 39 weeks ended January 29, 2022 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 Other Postretirement Benefit Expense
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IncomeTaxExpenseBenefit
-18724000 USD
CY2021Q1 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
-67013000 USD
CY2021Q1 us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
0.279
us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
811000 USD
us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
-57808000 USD
us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
-0.014
us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
-35334000 USD
us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
-122760000 USD
us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
0.288

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