Executive Summary

Q4 FY2024 total revenues rose 9.3% year over year to $366.1M as Badcock contributed $68.4M; finance charges and other revenues increased 10.7% .
Diluted EPS was $1.75, benefitting from a $104.9M bargain purchase gain; adjusted net loss was $(1.25) per diluted share after excluding transaction fees and debt extinguishment costs .
Retail gross margin expanded to 38.3% in Q4 (from 33.7% a year ago), while the retail segment reported a larger operating loss given integration and one-time costs .
Management guided to year-over-year improvements in retail sales and profitability in FY2025 and outlined ~$50M additional cost synergies and ~$50M revenue synergies over 18 months, following ~$50M cost removal in Q4 .
Potential stock reaction catalysts: synergy realization from the Badcock integration and liquidity optics after a $259.4M ABS issuance with $252.6M net proceeds; Class A notes were 13x oversubscribed and Class B 9x .

What Went Well and What Went Wrong

What Went Well

Consolidated revenue growth driven by Badcock contribution: total revenue +9.3% YoY to $366.1M; Badcock added $68.4M .
Retail gross margin expansion: Q4 retail gross margin reached 38.3% vs. 33.7% prior year, reflecting mix and operational improvements .
Strategic progress and synergy plan: ~$50M costs removed in Q4; identified ~$50M additional cost synergies and ~$50M revenue synergies expected over 18 months; “we expect to experience year-over-year improvements in both retail sales and profitability throughout fiscal year 2025” .
Liquidity strengthened: $259.4M ABS completed in Jan 2024, $252.6M net proceeds; Class A 13x and Class B 9x oversubscribed .

Management quotes:

“We have removed approximately $50 million of combined expenses during the fourth quarter and we have identified over $50 million of additional cost synergies…we expect to drive over $50 million of revenue synergies…” — Norm Miller, President & CEO .
“I am confident that the Badcock transaction…will position us to emerge stronger…we expect to experience year-over-year improvements in both retail sales and profitability throughout fiscal year 2025.” — Norm Miller .

What Went Wrong

Same-store sales weakness: Conn’s same-store sales declined 14.4% from lower discretionary spending on home-related products .
Retail segment losses widened: Q4 retail operating loss was $(38.1)M; adjusted retail operating loss was $(21.8)M .
Credit costs elevated: Provision for bad debts increased to $52.5M; allowance charge on Conn’s loans rose by $7.8M .
SG&A intensity: Retail SG&A as percent of revenues was 45.9% in Q4 .
Interest expense surged: Q4 interest expense was $26.1M, up from $13.1M prior year .

Financial Results

Consolidated and Segment Metrics vs prior quarters

Metric	Q2 FY2024	Q3 FY2024	Q4 FY2024
Total Revenues ($USD Millions)	$306.906	$280.130	$366.077
Diluted EPS ($)	$(1.39)	$(2.11)	$1.75
Operating Loss ($USD Millions)	$(15.355)	$(38.458)	$(50.762)
Interest Expense ($USD Millions)	$16.787	$22.448	$26.093
Retail Revenues ($USD Millions)	$246.336	$221.354	$296.874
Retail Operating Loss ($USD Millions)	$(10.419)	$(24.823)	$(38.104)
Retail Gross Margin (%)	36.9%	33.5%	38.3%
Credit Revenues ($USD Millions)	$63.091	$61.528	$70.787
Credit Operating (Loss) Income ($USD Millions)	$(4.501)	$(13.397)	$(12.773)
Provision for Bad Debts ($USD Millions)	$33.302	$39.123	$52.746

Q4 FY2024 Retail Net Sales by Category and Same-Store Trends

Category	Q4 FY2024 Net Sales ($USD Thousands)	% of Total	YoY Change ($USD Thousands)	YoY % Change	Same Store % Change
Furniture & Mattress	$120,334	40.9%	$34,350	+39.9%	(7.8)%
Home Appliance	$86,253	29.2%	$(10,638)	(11.0)%	(20.6)%
Consumer Electronics	$32,835	11.1%	$(9,658)	(22.7)%	(27.4)%
Home Office	$11,590	3.9%	$1,719	+17.4%	+12.1%
Other	$20,783	7.0%	$8,020	+62.8%	+19.5%
Repair Service Agreement Commissions	$21,138	7.2%	$948	+4.7%	(14.3)%
Service Revenues	$2,043	0.7%	$(222)	(9.8)%	N/A
Total Net Sales	$294,976	100.0%	$24,519	+9.1%	(14.4)%

KPIs and Credit Portfolio Statistics

KPI	Q2 FY2024	Q3 FY2024	Q4 FY2024
Total Applications Processed	341,118	333,622	309,949
Weighted Avg Origination Credit Score (sales financed)	623	623	619
% Applications Approved & Utilized	21.5%	18.8%	22.3%
In-house Financing (% of Retail Sales)	62.2%	61.1%	62.9%
Third-Party Financing (% of Retail Sales)	14.1%	14.7%	14.3%
Lease-to-Own (% of Retail Sales)	8.0%	8.6%	9.2%
60+ Day Delinquencies (% of portfolio carrying value)	11.1% (as of July 31, 2023)	11.0% (as of Oct 31, 2023)	12.2% (as of Jan 31, 2024)
Re-aged Balance (% of portfolio carrying value)	15.9%	18.1%	18.8%
Allowance for Bad Debts (% of portfolio balance)	16.6%	17.4%	18.1%
Average Outstanding Customer Balance ($)	$2,645	$2,661	$2,682

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Retail Sales	FY2025	Not provided	Expect YoY improvement in retail sales	Introduced directional guidance
Profitability	FY2025	Not provided	Expect YoY improvement in profitability	Introduced directional guidance
Cost Synergies	Next 18 months	Not provided	Additional ~$50M cost synergies identified	New
Revenue Synergies	Next 18 months	Not provided	~$50M revenue synergies expected (credit program transition, eCommerce for Badcock, shared retail growth)	New
Cost Reduction	Q4 FY2024	Not provided	~$50M combined expenses removed in Q4	New

Earnings Call Themes & Trends

Note: The Q4 FY2024 earnings call transcript could not be retrieved due to a document access error; themes below leverage Q2–Q4 press releases.

Topic	Previous Mentions (Q2 & Q3 FY2024)	Current Period (Q4 FY2024)	Trend
Macro and consumer spending	Persistent industry headwinds; lower discretionary spending; sequential same-store improvement but still negative	Continued macro challenges expected through FY2025	Ongoing headwind
eCommerce performance	Record eCommerce: $27.2M in Q2 (+41.5% YoY) and $26.3M in Q3 (+51.0% YoY)	Record annual eCommerce sales $109.3M (+38.2% YoY)	Positive momentum
Credit applications	Q2 +30.6% YoY; Q3 highest growth rate in five years (+40.6% YoY)	Annual applications +21.6% YoY	Improving demand funnel
Retail gross margin	Q2: 36.9%; Q3: 33.5% with better mix and freight normalization	Q4: 38.3%; FY2024: 35.9% (+189 bps)	Improving
Integration/Synergies	Badcock announced in Q3; synergy plan outlined	Integration underway; ~$50M costs removed; $50M additional cost and $50M revenue synergies targeted	Accelerating integration

Management Commentary

“Since completing the transformative transaction with W.S. Badcock…we have removed approximately $50 million of combined expenses during the fourth quarter and…identified over $50 million of additional cost synergies…we expect to drive over $50 million of revenue synergies as we transition Badcock’s credit program to Conn’s in-house loan product, offer Conn’s successful eCommerce capabilities to Badcock’s customers, and pursue shared retail growth strategies.” — Norm Miller, President & CEO .
“While we expect the macro-environment to remain challenging throughout our fiscal year 2025, I am confident…we expect to experience year-over-year improvements in both retail sales and profitability throughout fiscal year 2025.” — Norm Miller .
Prior quarter tone: “We remain focused on…turning around our retail performance and better serving our core credit constrained customers…strong year-over-year growth in credit applications and eCommerce sales.” — Norm Miller (Q3) .
Prior quarter tone: “Strategic initiatives…taking hold…record quarterly eCommerce revenue…credit quality remains stable…” — Norm Miller (Q2) .

Q&A Highlights

The Q4 FY2024 earnings call transcript could not be accessed due to a retrieval error (database inconsistency), so specific Q&A highlights and any clarifications provided during the call are unavailable at this time.

Estimates Context

S&P Global consensus estimates for Q4 FY2024 were unavailable for CONN due to missing CIQ mapping, preventing retrieval of “Primary EPS Consensus Mean” and “Revenue Consensus Mean.” Values retrieved from S&P Global were unavailable for this report [SpgiEstimatesError].

Key Takeaways for Investors

Integration is the near-term driver: Badcock contributed $68.4M to Q4 revenues, and management targets ~$50M additional cost and ~$50M revenue synergies over 18 months; cost removal of ~$50M already executed in Q4 .
Margin trajectory improving: Retail gross margin expanded to 38.3% in Q4 and FY2024 retail gross margin rose 189 bps to 35.9% .
Credit costs and leverage bear watching: Provision for bad debts elevated to $52.7M; interest expense increased to $26.1M; delinquency and re-aged metrics rose vs prior quarters .
Demand funnel healthier: Applications processed and financing mix indicate continued traction with core credit-constrained customers; in-house financing reached ~63% of retail sales in Q4 .
Liquidity optics improved: $259.4M ABS transaction generated $252.6M net proceeds; oversubscription suggests market receptivity to receivables-backed financing .
Near-term setup: Expect FY2025 YoY improvements in sales and profitability; execution on credit program transition at Badcock and eCommerce activation are critical to achieving revenue synergy targets .
Estimate context: With consensus unavailable, focus on company-communicated synergy milestones and quarterly trajectory vs Q2/Q3 reported results until S&P mapping is restored [SpgiEstimatesError].

CONNS INC (CONN)·Q4 2024 Earnings Summary