On Friday, Aug. 15, appliance and electronics retailer Conn's
- Sales were strong, but earnings came in lower than last year's number.
- Inventories and receivables are bulging, while accounts payable only grew about as fast as sales. The net result of all these points is a substantially worsened cash conversion cycle, and management might do well to pay attention to its inventory management and collection procedures.
- Hurricane Rita gave Conn's extended deadlines for payments to some of its vendors, along with some delayed tax-payment deadlines. Those deadlines expired in the last six months, resulting in $18.9 million in payments counting against cash flows. This quarter's cash flows couldn't possibly measure up against the previous-year numbers, which were unseasonably high and inflated by the same deferred payments.
(Figures in millions, except per-share data)
Income Statement Highlights
Avg. Est. |
Q2 2006 |
Q2 2005 |
Change |
|
---|---|---|---|---|
Net Sales |
$183 |
$182.2 |
$164.6 |
10.7% |
Net Profit |
-- |
$8.5 |
$9.6 |
(10.9%) |
EPS |
$0.34 |
$0.35 |
$0.40 |
(12.5%) |
Diluted Shares |
-- |
24.3 |
24 |
1.4% |
Get back to basics with a look at the income statement.
Margin Checkup
Q2 2006 |
Q2 2005 |
Change* |
|
---|---|---|---|
Gross Margin |
33.51% |
36.31% |
(2.8) |
Operating Margin |
6.72% |
9.07% |
(2.35) |
Net Margin |
4.69% |
5.83% |
(1.14) |
Margins are the earnings engine. See how they work.
Balance Sheet Highlights
Assets |
Q2 2006 |
Q2 2005 |
Change |
---|---|---|---|
Cash + ST Invest. |
$22.9 |
$19 |
20.3% |
Accounts Rec. |
$176.2 |
$136.2 |
29.4% |
Inventory |
$79.6 |
$60.8 |
30.9% |
Liabilities |
Q2 2006 |
Q2 2005 |
Change |
---|---|---|---|
Accounts Payable |
$37.5 |
$33.5 |
11.9% |
Long-Term Debt |
$0.0 |
$0.0 |
N/A |
Learn the ways of the balance sheet.
Cash Flow Highlights |
Q2 2006 |
Q2 2005 |
Change |
---|---|---|---|
Cash From Ops. |
-$5.6 |
$19.7 |
N/A |
Capital Expenditures |
$4.8 |
$6.7 |
(27.8%) |
Free Cash Flow |
-$10.5 |
$13.1 |
N/A |
Find out why Fools always follow the money.
Retail Checkup
Q2 2006 |
Q2 2005 |
Change |
|
---|---|---|---|
Days in Inventory |
59.5 |
55.9 |
3.6 |
Days in Receivables* |
81.7 |
72.8 |
8.9 |
Days Payables Outstanding |
27.6 |
27.0 |
0.6 |
Cash Conversion Cycle |
113.6 |
101.7 |
11.9 |
Read up on cash conversion metrics.
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Related Foolishness:
- Foolish Fundamentals: Cash Conversion Cycle
- Foolish Fundamentals: Inventory
- Foolish Fundamentals: The Cash Flow Statement
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At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here .