[July 12, 2017] |
|
Barnes & Noble Education Reports Fourth Quarter and Fiscal Year 2017 Financial Results
Barnes
& Noble Education, Inc. (NYSE: BNED), one of the largest
contract operators of physical and virtual bookstores for higher
education and K-12 institutions across the United States, one of the
largest textbook wholesalers, and a leading provider of digital
education services, today reported sales and earnings for the fourth
quarter and full year for fiscal 2017.
Fourth quarter 2017 results include 9 weeks of operations from MBS
Textbook Exchange, LLC ("MBS"), which BNED acquired on February 27,
2017. As a result of the consummation of the acquisition, the Company
will now report financial information for two reportable segments:
Barnes & Noble College Booksellers, LLC ("BNC") and MBS.
Financial highlights for the fourth quarter and fiscal year 2017:
-
Consolidated fourth quarter sales of $342.8 million increased 16.3%,
as compared to the prior year period; fiscal full year sales of
$1,874.4 million increased 3.7%, as compared to the prior year period.
-
Fourth quarter comparable store sales increased 1.4% for BNC, as
compared to the prior year period; fiscal full year comparable store
sales decreased 3.0% for BNC, as compared to the prior year period,
and decreased by 1.8% when excluding community colleges.
-
Consolidated fourth quarter GAAP net income of $0.2 million, as
compared to a net loss of $2.8 million in the prior year period; full
year net income of $5.4 million, as compared to $0.1 million in the
prior year period.
-
Consolidated fourth quarter non-GAAP Adjusted EBITDA of $25.6 million,
an increase of $6.8 million, as compared to the prior year period;
full year non-GAAP Adjusted EBITDA of $78.3 million, a decrease of
$2.2 million, as compared to the prior year period. The Adjusted
EBITDA is $82.5 million for the full fiscal year, an increase of $2.0
million, excluding MBS and intercompany eliminations.
-
BNC fourth quarter non-GAAP Adjusted EBITDA was $29.8 million, an
increase of $11.0 million, as compared with the prior year period;
full year non-GAAP Adjusted EBITDA was $82.5 million, an increase
of $2.0 million, as compared with the prior year period.
-
MBS fourth quarter and full year non-GAAP Adjusted EBITDA was
$(3.6) million.
-
Consolidated fourth quarter non-GAAP Adjusted Earnings of $4.5
million, as compared to Adjusted Earnings of $3.0 million in the prior
year period; full year non-GAAP Adjusted Earnings of $12.3 million, as
compared to $15.5 million in the prior year period.
Operational highlights for fiscal year 2017:
-
BNC opened 38 new stores with estimated annual sales of $118 million,
bringing the total stores operated to 769 locations as of April 30,
2017. The Company currently has contracts to open 23 new stores with
estimated annual sales of $50 million in fiscal 2018.
-
Completed the acquisition of MBS Textbook Exchange, the largest
contract operator of virtual bookstores, one of the largest used
college textbook wholesalers, bookstore system providers and
distributors of direct-to-student course materials in the nation. The
acquisition expands the Company's addressable market to include higher
education institutions and K-12 schools that need virtual bookstore
solutions, enables BNED to optimize its textbook sourcing and expands
its customer base for digital courseware and analytics. BNED now
operates 1,481 physical and virtual bookstores, including 712 MBS
stores, and serves more than 6 million students enrolled in higher
education and K-12 institutions.
-
MBS opened 80 virtual stores with estimated annual sales of $17
million in fiscal 2017 and has contracts to open 46 virtual stores
with estimated annual sales of $8 million in fiscal 2018.
-
Announced partnership with Unizin, a nonprofit consortium focused on
promoting affordability, access, and student success in digital
education, to provide Unizin's 22 member universities with BNED
LoudCloud's predictive analytics solution, LoudSight.
"In fiscal 2017, we successfully executed upon our strategy to expand
our distribution and content platform. As a result, we continue to
improve our competitive position to deliver value for shareholders and
partners with our comprehensive solution for education institutions --
flexible physical or virtual store operations, including our acquisition
of MBS; the most robust, affordable textbook inventory; and a
sophisticated learning management solution comprised of LoudSight learning
analytics, advanced OER courseware, and competency learning solutions,"
said Max J. Roberts, Chief Executive Officer, Barnes & Noble Education,
Inc. "Our complete end-to-end platform makes us the ideal partner for
schools as they seek to meet student success and close the affordability
and accessibility gap for students with increasingly personalized
learning solutions. Our strong market position continues to be built
with new business wins, textbook sales and rentals, analytic platform
adoptions and OER content adoptions. Existing and prospective customers
alike are responding positively to our enhanced offerings, and we expect
new store contracts and digital business wins to make important
contributions as we continue to navigate challenging near-term
enrollment trends in an increasingly competitive market."
Consolidated fourth quarter sales of $342.8 million increased $48.0
million, or 16.3%, as compared to the prior year period. The Company
reported consolidated net income of $0.2 million.
Fiscal full year consolidated sales were $1,874.4 million, an increase
of $66.4 million, or 3.7%, as compared to the prior year period. The
Company reported consolidated net income of $5.4 million, which includes
transaction costs of $9.6 million and restructuring costs of $1.8
million. Non-GAAP Adjusted Earnings were $12.3 million compared to $15.5
million for the prior year period.
Comparable store sales increased 1.4% for BNC for the quarter. As
disclosed in the Company's third quarter fiscal 2017 earnings release,
the Spring Rush period extended into the fourth quarter due to later
school openings and a continued pattern of students buying course
materials later in the semester.
Comparable store sales decreased 3.0% for BNC for fiscal year 2017,
driven by the enrollment declines at community colleges, increased
consumer purchases directly with publishers and other online providers,
and overall unfavorable retail trends. The 3.0% decline in comparable
store sales was approximately $50.6 million of sales for BNC, of which
$27.4 million is attributable to two-year community colleges. Comparable
store sales excluding two-year community colleges decreased by 1.8% year
to date.
BNC opened 38 new stores with estimated annual sales of $118 million in
fiscal 2017, bringing the total stores operated by BNC to 769 locations
as of April 29, 2017.
MBS sales for the two months following the acquisition, a seasonally low
period, were $34.1 million, with approximately $14.1 million for
Wholesale sales and $20.0 million for Direct sales.
The Company's non-GAAP Adjusted EBITDA was $25.6 million for the
quarter, as compared to $18.8 million in the prior year period, due
primarily to increased sales and expense leveraging. The Company's
non-GAAP Adjusted EBITDA was $78.3 million for the full year as compared
with $80.5 million in the prior year period.
Fourth quarter consolidated net income was $0.2 million, or $0.0 per
diluted share, compared to net loss of $(2.8) million, or $(0.06) per
diluted share, in the prior year period. The current year's fiscal
fourth quarter has 46.9 million diluted shares outstanding, while the
prior year period had 47.2 million diluted shares outstanding. The
Company reported non-GAAP Adjusted Earnings of $4.5 million during the
quarter, compared with non-GAAP Adjusted Earnings of $3.0 million in the
prior year period.
Outlook
For fiscal year 2018, the Company expects sales at BNC to be relatively
flat, while BNC comparable store sales are projected to decline in the
low- to mid-single digit percentage point range year over year. In
addition, the Company expects consolidated sales to be in the range of
$2.25 billion to $2.35 billion before intercompany eliminations. Capital
expenditures are expected to be approximately $50 million, an increase
from fiscal 2017 due to new store growth at BNC.
Conference Call
A conference call with Barnes & Noble Education, Inc. senior management
will be webcast at 10:00 a.m. Eastern Time on Wednesday, July 12, 2017
and can be accessed at the Barnes & Noble Education, Inc. corporate
website at www.bned.com.
Barnes & Noble Education, Inc. expects to report fiscal 2018 first
quarter results on or about September 6, 2017.
About Barnes & Noble Education, Inc.
Barnes & Noble Education, Inc. (NYSE: BNED), one of the largest contract
operators of physical and virtual bookstores for higher education and
K-12 institutions across the United States, one of the largest textbook
wholesalers, and a leading provider of digital education services,
enhances the academic and social purpose of educational institutions.
Through its Barnes & Noble College and MBS subsidiaries, Barnes & Noble
Education operates 1,481 physical and virtual bookstores and serves more
than 6 million students, delivering essential educational content and
tools within a dynamic retail environment. Through LoudCloud, its
digital education platform, Barnes & Noble Education offers a suite of
digital software, content and services that include predictive
analytics, OER courseware, competency-based solutions and a learning
management system. Barnes & Noble Education acts as a strategic partner
to drive student success; provide value and support to students and
faculty; and create loyalty and improve retention, all while supporting
the financial goals of college and university partners.
General information on Barnes & Noble Education, Inc. can be obtained by
visiting the Company's corporate website: 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. 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: general competitive
conditions, including actions our competitors 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; the general economic environment and
consumer spending patterns; decreased consumer demand for our products,
low growth or declining sales; our ability to continue to successfully
integrate the operations of MBS Textbook Exchange, LLC into our Company,
while facing competition from not only physical bookstore operations but
also virtual solutions; the strategic objectives, anticipated synergies,
and/or other expected potential benefits of the MBS Textbook Exchange,
LLC acquisition may not be fully realized or may take longer than
expected; the integration of MBS Textbook Exchange, LLC's operations
into our own may also increase the risk of our internal controls being
found ineffective; risks associated with operation or performance of MBS
Textbook Exchange, LLC's point-of-sales systems that are sold to college
bookstore customers; 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, and
enhancements higher education digital products, and the inability to
achieve the expected cost savings; our ability to successfully implement
our strategic initiatives including our ability to identify, compete for
and execute upon additional acquisitions and strategic investments;
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;
changes to purchase or rental general terms, payment terms, return
policies, the discount or margin on products or other terms with our
suppliers; 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 and data 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; the risk of price reduction or change in
format of course materials by publishers, which could negatively impact
revenues and margin; possible increases in shipping rates or
interruptions in shipping service, obsolete or excessive inventory;
product shortages, including risks associated with merchandise sourced
indirectly from outside the United States; changes in law or regulation;
enactment of laws which may restrict or prohibit our use of emails or
similar marketing activities; the amount of our indebtedness and ability
to comply with covenants applicable to 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 or 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 of the
Form 10-K for the 52 weeks ended April 29, 2017, which is expected to be
filed on or about July 12, 2017. 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
|
|
On August 2, 2015, we completed the legal separation from Barnes &
Noble, Inc., at which time we began to operate as an independent
publicly-traded company.
|
|
For the results of operations for the 13 weeks ended August 1,
2015 (first quarter of fiscal 2016), our consolidated financial
statements are presented on a stand-alone basis since we were
still part of Barnes & Noble, Inc. until the consummation of the
Spin-Off on August 2, 2015, and the results of operations for the
39 weeks ended April 30, 2016 (remainder of fiscal 2016) in our
consolidated financial statements are presented on a consolidated
basis as we became a separate consolidated entity.
|
|
For fiscal 2017, the results of operations for the entire 52 weeks
ended April 29, 2017 reflected in our consolidated financial
statements are presented on a consolidated basis.
|
|
On February 27, 2017, we acquired MBS Textbook Exchange, LLC
("MBS"). The consolidated financial statements for the 13 weeks and
52 weeks ended April 29, 2017 include the financial results of MBS
from the acquisition date, February 27, 2017, to April 29, 2017.
Subsequent to the acquisition, the consolidated financial statements
include the accounts of MBS and all material intercompany accounts
and transactions have been eliminated in consolidation. For
additional information on MBS acquisition, see Form 8-K filed on
February 28, 2017 and Form 8K/A pro forma information filed on May
8, 2017.
|
|
Additionally, effective with the MBS acquisition, we determined
that we have two reportable segments: Barnes & Noble College
Booksellers, LLC ("BNC") and MBS, whereas BNC was previously our
only reportable segment prior the acquisition.
|
-
BNC operates 769 physical campus bookstores, the majority of
which also have school-branded e-commerce sites operated by BNC,
and BNC also includes our digital operations.
-
MBS operates 712 virtual bookstores and is the largest contract
operator of virtual bookstores for college and university
campuses, and private/parochial K-12 schools. MBS is also one of
the largest textbook wholesalers in the country. MBS's wholesale
business centrally sources and sells new and used textbooks to
more than 3,700 physical college bookstores, including BNC's 769
campus bookstores.
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
Sales:
|
|
|
|
|
|
|
|
|
|
Product sales and other
|
|
|
$
|
266,124
|
|
|
$
|
219,769
|
|
|
$
|
1,638,934
|
|
|
$
|
1,579,617
|
Rental income
|
|
|
76,706
|
|
|
74,990
|
|
|
235,428
|
|
|
228,412
|
Total sales
|
|
|
342,830
|
|
|
294,759
|
|
|
1,874,362
|
|
|
1,808,029
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
Product and other cost of sales
|
|
|
181,692
|
|
|
151,636
|
|
|
1,280,374
|
|
|
1,224,955
|
Rental cost of sales
|
|
|
38,627
|
|
|
37,079
|
|
|
136,625
|
|
|
129,725
|
Total cost of sales
|
|
|
220,319
|
|
|
188,715
|
|
|
1,416,999
|
|
|
1,354,680
|
Gross profit
|
|
|
122,511
|
|
|
106,044
|
|
|
457,363
|
|
|
453,349
|
Selling and administrative expenses
|
|
|
96,924
|
|
|
87,264
|
|
|
379,095
|
|
|
372,821
|
Depreciation and amortization
|
|
|
14,261
|
|
|
13,340
|
|
|
53,318
|
|
|
52,690
|
Transaction costs
|
|
|
6,967
|
|
|
1,596
|
|
|
9,605
|
|
|
2,398
|
Restructuring costs (a)
|
|
|
-
|
|
|
8,056
|
|
|
1,790
|
|
|
8,830
|
Impairment loss (non-cash) (a)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,987
|
Operating income (loss)
|
|
|
4,359
|
|
|
(4,212
|
)
|
|
13,555
|
|
|
4,623
|
Interest expense, net
|
|
|
1,489
|
|
|
604
|
|
|
3,464
|
|
|
1,872
|
Income (loss) before income taxes
|
|
|
2,870
|
|
|
(4,816
|
)
|
|
10,091
|
|
|
2,751
|
Income tax expense (benefit)
|
|
|
2,643
|
|
|
(2,020
|
)
|
|
4,730
|
|
|
2,667
|
Net income (loss)
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
-
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.12
|
|
|
$
|
-
|
Diluted
|
|
|
$
|
-
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.11
|
|
|
$
|
-
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
46,472
|
|
|
47,230
|
|
|
46,317
|
|
|
46,238
|
Diluted
|
|
|
46,903
|
|
|
47,230
|
|
|
46,763
|
|
|
46,479
|
|
(a) For additional information, see Note (a) in the Non-GAAP
disclosure information of this Press Release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
|
|
|
|
|
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
Percentage of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales and other
|
|
|
|
|
|
|
|
|
|
77.6
|
%
|
|
74.6
|
%
|
|
87.4
|
%
|
|
87.4
|
%
|
Rental income
|
|
|
|
|
|
|
|
|
|
22.4
|
%
|
|
25.4
|
%
|
|
12.6
|
%
|
|
12.6
|
%
|
Total sales
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product and other cost of sales (a)
|
|
|
|
|
|
|
|
|
|
68.3
|
%
|
|
69.0
|
%
|
|
78.1
|
%
|
|
77.5
|
%
|
Rental cost of sales (a)
|
|
|
|
|
|
|
|
|
|
50.4
|
%
|
|
49.4
|
%
|
|
58.0
|
%
|
|
56.8
|
%
|
Total cost of sales
|
|
|
|
|
|
|
|
|
|
64.3
|
%
|
|
64.0
|
%
|
|
75.6
|
%
|
|
74.9
|
%
|
Gross profit
|
|
|
|
|
|
|
|
|
|
35.7
|
%
|
|
36.0
|
%
|
|
24.4
|
%
|
|
25.1
|
%
|
Selling and administrative expenses
|
|
|
|
|
|
|
|
|
|
28.3
|
%
|
|
29.6
|
%
|
|
20.2
|
%
|
|
20.6
|
%
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
4.2
|
%
|
|
4.5
|
%
|
|
2.8
|
%
|
|
2.9
|
%
|
Transaction costs
|
|
|
|
|
|
|
|
|
|
2.0
|
%
|
|
0.5
|
%
|
|
0.5
|
%
|
|
0.1
|
%
|
Restructuring costs
|
|
|
|
|
|
|
|
|
|
-
|
%
|
|
2.7
|
%
|
|
0.1
|
%
|
|
0.5
|
%
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
-
|
%
|
|
-
|
%
|
|
-
|
%
|
|
0.7
|
%
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
1.3
|
%
|
|
(1.4
|
)%
|
|
0.7
|
%
|
|
0.2
|
%
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
0.4
|
%
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
Income (loss) before income taxes
|
|
|
|
|
|
|
|
|
|
0.8
|
%
|
|
(1.6
|
)%
|
|
0.5
|
%
|
|
0.1
|
%
|
Income tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
0.8
|
%
|
|
(0.7
|
)%
|
|
0.2
|
%
|
|
0.1
|
%
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
-
|
%
|
|
(0.9
|
)%
|
|
0.3
|
%
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents the percentage these costs bear to the related sales,
instead of total sales.
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
19,003
|
|
|
$
|
28,568
|
|
Receivables, net
|
|
|
86,040
|
|
|
50,924
|
|
Merchandise inventories, net
|
|
|
434,064
|
|
|
312,747
|
|
Textbook rental inventories
|
|
|
52,826
|
|
|
47,760
|
|
Prepaid expenses and other current assets
|
|
|
10,698
|
|
|
6,453
|
|
Total current assets
|
|
|
602,631
|
|
|
446,452
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
116,613
|
|
|
111,185
|
|
Goodwill
|
|
|
329,467
|
|
|
280,911
|
|
Intangible assets, net
|
|
|
209,885
|
|
|
199,663
|
|
Other noncurrent assets
|
|
|
41,236
|
|
|
33,472
|
|
Total assets
|
|
|
$
|
1,299,832
|
|
|
$
|
1,071,683
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
192,742
|
|
|
$
|
152,175
|
|
Accrued liabilities
|
|
|
120,478
|
|
|
105,877
|
|
Short-term borrowings
|
|
|
100,000
|
|
|
-
|
|
Total current liabilities
|
|
|
413,220
|
|
|
258,052
|
|
Long-term deferred taxes, net
|
|
|
16,871
|
|
|
29,865
|
|
Other long-term liabilities
|
|
|
96,433
|
|
|
75,380
|
|
Long-term borrowings
|
|
|
59,600
|
|
|
-
|
|
Total liabilities
|
|
|
586,124
|
|
|
363,297
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Parent company investment
|
|
|
-
|
|
|
-
|
|
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,
49,372 and 48,645 shares, respectively; outstanding,
46,517 and 46,755 shares, respectively
|
|
|
494
|
|
|
486
|
|
Additional paid-in-capital
|
|
|
708,871
|
|
|
699,513
|
|
Retained earnings
|
|
|
32,363
|
|
|
27,002
|
|
Treasury stock, at cost
|
|
|
(28,020
|
)
|
|
(18,615
|
)
|
Total stockholders' equity
|
|
|
713,708
|
|
|
708,386
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,299,832
|
|
|
$
|
1,071,683
|
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Earnings Per Share
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
Numerator for basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
Less allocation of earnings to participating securities
|
|
|
-
|
|
|
-
|
|
|
(3
|
)
|
|
-
|
Net income (loss) available to common shareholders
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
Allocation of earnings to participating securities
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
-
|
Less diluted allocation of earnings to participating securities
|
|
|
-
|
|
|
-
|
|
|
(3
|
)
|
|
-
|
Net income (loss) available to common shareholders
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares (a)
|
|
|
46,472
|
|
|
47,230
|
|
|
46,317
|
|
|
46,238
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings (loss) per share: (a)(b)
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
|
|
|
46,472
|
|
|
47,230
|
|
|
46,317
|
|
|
46,238
|
Average dilutive restricted stock units
|
|
|
366
|
|
|
-
|
|
|
389
|
|
|
227
|
Average dilutive performance shares
|
|
|
59
|
|
|
-
|
|
|
40
|
|
|
-
|
Average dilutive restricted shares
|
|
|
6
|
|
|
-
|
|
|
17
|
|
|
-
|
Average dilutive options
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14
|
Diluted weighted average common shares
|
|
|
46,903
|
|
|
47,230
|
|
|
46,763
|
|
|
46,479
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
-
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.12
|
|
|
$
|
-
|
Diluted
|
|
|
$
|
-
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.11
|
|
|
$
|
-
|
|
|
|
(a)
|
|
For periods prior to the Spin-Off from Barnes & Noble on August 2,
2015, Basic earnings per share and weighted-average basic shares
outstanding are based on the number of shares of Barnes & Noble
common stock outstanding as of the end of the period, adjusted for
an assumed distribution ratio of 0.632 shares of our Common Stock
for every one share of Barnes & Noble common stock held on the
record date for the Spin-Off.
|
|
|
|
|
(b)
|
|
For periods prior to the Spin-Off from Barnes & Noble on August 2,
2015, Diluted earnings per share and weighted-average diluted
shares outstanding reflect potential common shares from Barnes &
Noble equity plans in which our employees participated based on
the distribution ratio.
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Segment Information (a)
|
|
|
|
|
|
13 weeks ended
|
|
|
52 weeks ended
|
|
|
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
|
April 29, 2017
|
|
April 30, 2016
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
|
|
|
$
|
314,029
|
|
|
$
|
294,759
|
|
|
|
$
|
1,845,561
|
|
|
$
|
1,808,029
|
MBS (a)
|
|
|
|
|
|
34,091
|
|
|
-
|
|
|
|
34,091
|
|
|
-
|
Elimination
|
|
|
|
|
|
(5,290
|
)
|
|
-
|
|
|
|
(5,290
|
)
|
|
-
|
Total
|
|
|
|
|
|
$
|
342,830
|
|
|
$
|
294,759
|
|
|
|
$
|
1,874,362
|
|
|
$
|
1,808,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
|
|
|
$
|
118,400
|
|
|
$
|
106,044
|
|
|
|
$
|
453,252
|
|
|
$
|
453,349
|
MBS (a)
|
|
|
|
|
|
4,748
|
|
|
-
|
|
|
|
4,748
|
|
|
-
|
Elimination
|
|
|
|
|
|
(637
|
)
|
|
-
|
|
|
|
(637
|
)
|
|
-
|
Total
|
|
|
|
|
|
$
|
122,511
|
|
|
$
|
106,044
|
|
|
|
$
|
457,363
|
|
|
$
|
453,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
|
|
|
$
|
88,607
|
|
|
$
|
87,264
|
|
|
|
$
|
370,778
|
|
|
$
|
372,821
|
MBS (a)
|
|
|
|
|
|
8,317
|
|
|
-
|
|
|
|
8,317
|
|
|
-
|
Total
|
|
|
|
|
|
$
|
96,924
|
|
|
$
|
87,264
|
|
|
|
$
|
379,095
|
|
|
$
|
372,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
|
|
|
$
|
29,793
|
|
|
$
|
18,780
|
|
|
|
$
|
82,474
|
|
|
$
|
80,528
|
MBS (a)
|
|
|
|
|
|
(3,569
|
)
|
|
-
|
|
|
|
(3,569
|
)
|
|
-
|
Elimination
|
|
|
|
|
|
(637
|
)
|
|
-
|
|
|
|
(637
|
)
|
|
-
|
Total
|
|
|
|
|
|
$
|
25,587
|
|
|
$
|
18,780
|
|
|
|
$
|
78,268
|
|
|
$
|
80,528
|
|
|
|
|
(a)
|
|
On February 27, 2017, we acquired MBS Textbook Exchange, LLC
("MBS"). The consolidated financial statements for the 13 weeks and
52 weeks ended April 29, 2017 include the financial results of MBS
from the acquisition date (February 27, 2017) to April 29, 2017.
Additionally, effective with the acquisition, we determined that we
have two reportable segments: Barnes & Noble College Booksellers,
LLC ("BNC") and MBS, whereas BNC was previously our only reportable
segment prior the acquisition. For more information, see Explanatory
Note.
|
|
|
|
|
|
|
|
Percentage of Segment Sales
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
Gross margin
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
37.7
|
%
|
|
36.0
|
%
|
|
24.6
|
%
|
|
25.1
|
%
|
MBS (a)
|
|
|
13.9
|
%
|
|
-
|
%
|
|
13.9
|
%
|
|
-
|
%
|
Elimination
|
|
|
12.0
|
%
|
|
-
|
%
|
|
12.0
|
%
|
|
-
|
%
|
Total gross margin
|
|
|
35.7
|
%
|
|
36.0
|
%
|
|
24.4
|
%
|
|
25.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses
|
|
|
|
|
|
|
|
|
|
BNC
|
|
|
28.2
|
%
|
|
29.6
|
%
|
|
20.1
|
%
|
|
20.6
|
%
|
MBS (a)
|
|
|
24.4
|
%
|
|
-
|
%
|
|
24.4
|
%
|
|
-
|
%
|
Total selling and administrative expenses
|
|
|
28.3
|
%
|
|
29.6
|
%
|
|
20.2
|
%
|
|
20.6
|
%
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Non-GAAP Information
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
Adjusted Earnings
|
|
|
13 weeks ended
|
|
|
52 weeks ended
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
|
April 29, 2017
|
|
April 30, 2016
|
Net income (loss)
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
|
$
|
5,361
|
|
|
$
|
84
|
Reconciling items, after-tax (below)
|
|
|
4,272
|
|
|
5,818
|
|
|
|
6,986
|
|
|
15,378
|
Adjusted Earnings (Non-GAAP)
|
|
|
$
|
4,499
|
|
|
$
|
3,022
|
|
|
|
$
|
12,347
|
|
|
$
|
15,462
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, pre-tax
|
|
|
|
|
|
|
|
|
|
|
Transaction costs (a)
|
|
|
$
|
6,967
|
|
|
$
|
1,596
|
|
|
|
$
|
9,605
|
|
|
$
|
2,398
|
Restructuring costs (b)
|
|
|
-
|
|
|
8,056
|
|
|
|
1,790
|
|
|
8,830
|
Impairment loss (non-cash) (b)
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
11,987
|
Reconciling items, pre-tax
|
|
|
6,967
|
|
|
9,652
|
|
|
|
11,395
|
|
|
23,215
|
Less: Pro forma income tax impact (c)
|
|
|
2,695
|
|
|
3,834
|
|
|
|
4,409
|
|
|
7,837
|
Reconciling items, after-tax
|
|
|
$
|
4,272
|
|
|
$
|
5,818
|
|
|
|
$
|
6,986
|
|
|
$
|
15,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
13 weeks ended
|
|
|
52 weeks ended
|
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
|
April 29, 2017
|
|
April 30, 2016
|
Net income (loss)
|
|
|
$
|
227
|
|
|
$
|
(2,796
|
)
|
|
|
$
|
5,361
|
|
|
$
|
84
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
14,261
|
|
|
13,340
|
|
|
|
53,318
|
|
|
52,690
|
Interest expense, net
|
|
|
1,489
|
|
|
604
|
|
|
|
3,464
|
|
|
1,872
|
Income tax expense (benefit)
|
|
|
2,643
|
|
|
(2,020
|
)
|
|
|
4,730
|
|
|
2,667
|
Transaction costs (a)
|
|
|
6,967
|
|
|
1,596
|
|
|
|
9,605
|
|
|
2,398
|
Restructuring costs (b)
|
|
|
-
|
|
|
8,056
|
|
|
|
1,790
|
|
|
8,830
|
Impairment loss (non-cash) (b)
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
11,987
|
Adjusted EBITDA (Non-GAAP)
|
|
|
$
|
25,587
|
|
|
$
|
18,780
|
|
|
|
$
|
78,268
|
|
|
$
|
80,528
|
|
(a) Transaction costs are costs incurred for business development
and acquisitions.
|
|
|
(b) In fiscal 2016, we implemented a plan to restructure our digital
operations. As a result of this restructuring, we recorded a
non-cash impairment loss of $12 million related to all of the
capitalized content costs for the Yuzu® eTextbook platform ($9
million), and recorded a non-recurring other than temporary loss
related to an investment held at cost ($3 million).
|
|
|
Additionally, we announced a reduction in staff and closure of the
facilities in Mountain View, California, and Redmond, Washington
that support the Yuzu® eTextbook platform. The cost of severance,
retention, and other restructuring costs (i.e. subleasing
facilities) of $8.8 million and $1.8 million in fiscal 2016 and
fiscal 2017, respectively. The restructuring was completed in fiscal
2017.
|
|
|
(c) Represents the income tax effects of the non-GAAP items.
|
|
|
Use of Non-GAAP Financial Information - Adjusted Earnings and
Adjusted EBITDA
|
|
|
To supplement the Company's condensed 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 non-GAAP financial measures of
Adjusted Earnings (defined as Net Income adjusted for certain
reconciling items) and Adjusted EBITDA (defined by the Company as
earnings before interest, taxes, depreciation and amortization, as
adjusted for additional items subtracted from or added to net
income).
|
|
|
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. These non-GAAP financial
measures should not be considered as alternatives to net income as
an indicator of the Company's performance or any other measures of
performance derived in accordance with GAAP.
|
|
|
The Company's management reviews these Non-GAAP financial measures
as internal measures to evaluate the Company's performance and
manage the Company's operations. The Company's management believes
that these measures are useful performance measures which are used
by the Company to facilitate a comparison of on-going operating
performance on a consistent basis from period-to-period. The
Company's management believes that these Non-GAAP financial measures
provide for a more complete understanding of factors and trends
affecting the Company's business than measures under GAAP can
provide alone, as it excludes certain items that do not reflect the
ordinary earnings of its operations. The Company's Board of
Directors and management also use Adjusted EBITDA as one of the
primary methods for planning and forecasting overall expected
performance, for evaluating on a quarterly and annual basis actual
results against such expectations, and as a measure for performance
incentive plans. The Company's management believes that the
inclusion of Adjusted EBITDA and Adjusted Earnings results provides
investors useful and important information regarding the Company's
operating results.
|
|
|
The non-GAAP measures included in the Press Release attached
hereto as Exhibit 99.1 has been reconciled to the comparable GAAP
measures as required under Securities and Exchange Commission (the
"SEC") rules regarding the use of non-GAAP financial measures. All
of the items included in the reconciliations below are either (i)
non-cash items or (ii) items that management does not consider in
assessing the Company's on-going operating performance. The
Company urges investors to carefully review the GAAP financial
information included as part of the Company's Form 10-K dated
April 29, 2017 and expected to be filed with the SEC on July 12,
2017, which includes consolidated financial statements for each of
the three years for the period ended April 29, 2017 (fiscal 2017,
fiscal 2016, and fiscal 2015), the Company's Quarterly Report on
Form 10-Q for the period ended July 30, 2016 filed with the SEC on
September 8, 2016, the Company's Quarterly Report on Form 10-Q for
the period ended October 29, 2016 filed with the SEC on December
6, 2016, and the Company's Quarterly Report on Form 10-Q for the
period ended January 28, 2017 filed with the SEC on February 28,
2017.
|
|
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Sales Information
(In millions)
(Unaudited)
|
Total Sales
|
|
|
|
The components of the sales variances for the 13 and 52 week
periods of April 29, 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
MBS Sales (a)
|
|
|
|
|
|
|
Wholesale
|
|
|
$
|
14.1
|
|
|
$
|
14.1
|
|
|
Direct
|
|
|
20.0
|
|
|
20.0
|
|
|
MBS total sales subtotal:
|
|
|
$
|
34.1
|
|
|
$
|
34.1
|
|
|
BNC Sales
|
|
|
|
|
|
|
New stores (b)
|
|
|
$
|
16.8
|
|
|
$
|
109.5
|
|
|
Closed stores (b)
|
|
|
(3.2
|
)
|
|
(23.8
|
)
|
|
Comparable stores (c)
|
|
|
2.9
|
|
|
(50.6
|
)
|
|
Textbook rental deferral
|
|
|
0.5
|
|
|
0.6
|
|
|
Service revenue (d)
|
|
|
2.5
|
|
|
5.8
|
|
|
Other (e)
|
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|
BNC total sales subtotal:
|
|
|
$
|
19.3
|
|
|
$
|
37.5
|
|
|
Eliminations (f)
|
|
|
$
|
(5.3
|
)
|
|
$
|
(5.3
|
)
|
|
Total sales variance
|
|
|
$
|
48.1
|
|
|
$
|
66.3
|
|
|
|
|
|
|
(a)
|
|
Represents sales for MBS from the acquisition date, February 27,
2017, to April 29, 2017. Our retail business (BNC and MBS Direct) is
highly seasonal, with sales generally highest in the second and
third fiscal quarters, when college students generally purchase
textbooks for the upcoming semesters, and lowest in the first and
fourth fiscal quarters. Sales attributable to our MBS wholesale
business are generally highest in our first, second and third
quarter, as it sells textbooks for retail distribution, which
somewhat offsets the decreased first quarter sales attributable to
our retail business.
|
|
(b)
|
|
We added 38 new stores and closed 20 stores during the 52 weeks
ended April 29, 2017, ending the period with a total of 769 stores.
|
|
(c)
|
|
See below.
|
|
(d)
|
|
Service revenue includes Promoversity, LoudCloud, brand
partnerships, shipping and handling and revenue from other programs.
|
|
(e)
|
|
Other includes certain adjusting items related to return reserves
and other deferred items.
|
|
(f)
|
|
Eliminate MBS sales to BNED and BNED commissions earned from MBS.
|
|
|
|
Comparable Sales - Barnes & Noble College
|
|
Comparable store sales variances by category for the 13 and 52
week periods are as follows:
|
|
|
|
|
|
|
|
13 weeks ended
|
|
52 weeks ended
|
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
Textbooks
|
|
$
|
2.9
|
|
|
3.6
|
%
|
|
$
|
5.4
|
|
|
7.4
|
%
|
|
$
|
(46.1
|
)
|
|
(4.0
|
)%
|
|
$
|
(43.9
|
)
|
|
(3.8
|
)%
|
General Merchandise
|
|
0.6
|
|
|
0.5
|
%
|
|
3.5
|
|
|
2.9
|
%
|
|
(0.7
|
)
|
|
(0.1
|
)%
|
|
13.3
|
|
|
2.6
|
%
|
Trade Books
|
|
(0.5
|
)
|
|
(4.1
|
)%
|
|
0.5
|
|
|
4.6
|
%
|
|
(3.2
|
)
|
|
(5.8
|
)%
|
|
1.0
|
|
|
1.8
|
%
|
Other
|
|
(0.1
|
)
|
|
(94.4
|
)%
|
|
(0.2
|
)
|
|
(72.5
|
)%
|
|
(0.6
|
)
|
|
(88.9
|
)%
|
|
(2.1
|
)
|
|
(73.2
|
)%
|
Total Comparable Store Sales
|
|
$
|
2.9
|
|
|
1.4
|
%
|
|
$
|
9.2
|
|
|
4.5
|
%
|
|
$
|
(50.6
|
)
|
|
(3.0
|
)%
|
|
$
|
(31.7
|
)
|
|
(1.9
|
)%
|
|
Effective for the first quarter of Fiscal 2017, comparable store
sales includes sales from stores that have been open for an entire
fiscal year period, does not include sales from closed stores for
all periods presented, and digital agency sales are included on a
gross basis. We believe the current comparable store sales
calculation method better reflects the manner in which management
views comparable sales, as well as the seasonal nature of our
business. For Fiscal 2016, comparable store sales included sales
from stores that were open for at least 15 months, excluded sales
from closed stores for all periods presented, and included digital
agency sales on a net basis.
|
|
|
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
MBS Historical Sales Information
(Unaudited)
|
MBS Historical Sales Trend by Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
MBS Sales
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale
|
|
|
43
|
%
|
|
16
|
%
|
|
32
|
%
|
|
9
|
%
|
|
100
|
%
|
Direct
|
|
|
25
|
%
|
|
39
|
%
|
|
21
|
%
|
|
15
|
%
|
|
100
|
%
|
Total
|
|
|
35
|
%
|
|
26
|
%
|
|
28
|
%
|
|
11
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170712005318/en/
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