Barnes & Noble Education(BNED)2022-08-30 16:00Debt and Financing - The company has a credit facility with a committed principal amount of $400,000, with an option to request an increase of up to $100,000[78]. - As of July 30, 2022, the company had outstanding borrowings of $230,300, comprised of $190,300 under the Credit Facility and $40,000 under the FILO Facility[78]. - During the 13 weeks ended July 30, 2022, the company borrowed $117,200 and repaid $112,600 under the Credit Agreement[78]. - The Term Loan Credit Agreement provides for term loans of $30,000, with an interest rate of 11.25% and a maturity date of June 7, 2024[79]. - The company incurred debt issuance costs totaling $1,909 related to the Term Loan Credit Agreement during the 13 weeks ended July 30, 2022[81]. - As of July 30, 2022, the company had outstanding borrowings of $260.3 million under the Credit Agreement and $203.7 million under the Term Loan Agreement[160]. Lease and Restructuring - Net lease expense for the 13 weeks ended July 30, 2022, was $38,045, an increase from $28,075 for the same period in 2021[85]. - The total lease payments as of July 30, 2022, amounted to $390,823, with operating lease liabilities at period end of $346,994[85]. - The weighted average remaining lease term as of July 30, 2022, was 5.3 years, with a weighted average discount rate of 4.2%[85]. - The company recognized restructuring and other charges totaling $375 during the 13 weeks ended July 30, 2022, compared to $1,905 in the same period in 2021[86]. Sales and Revenue - Total sales for the 13 weeks ended July 30, 2022, were $263.858 million, an increase from $240.794 million for the same period in 2021, representing an increase of 9.5%[117]. - Product sales and other accounted for 95.9% of total sales, while rental income contributed 4.1% for the 13 weeks ended July 30, 2022[118]. - Retail sales increased by $26.0 million, or 12.4%, to $236.5 million during the 13 weeks ended July 30, 2022, from $210.5 million during the same period in 2021[125]. - Total course material rental income for Retail decreased by $2.1 million, or 16.2%, to $10.9 million during the 13 weeks ended July 30, 2022, from $13.0 million during the same period in 2021[128]. - Revenue for First Day models increased to $45.0 million, or 67%, compared to $27.0 million in the prior year period[128]. Expenses and Losses - The net loss for the 13 weeks ended July 30, 2022, was $52.707 million, compared to a net loss of $43.628 million for the same period in 2021[117]. - Total Selling and Administrative Expenses rose by $12.3 million, or 14.2%, to $98.5 million during the 13 weeks ended July 30, 2022, compared to $86.2 million in the same period of 2021[141]. - The operating loss for the 13 weeks ended July 30, 2022, was $(47.9) million, compared to $(40.7) million in the same period of 2021, representing an increase in the operating loss margin from (16.9)% to (18.0)%[147]. - Net interest expense increased by $1.4 million, or 55.1%, to $3.9 million during the 13 weeks ended July 30, 2022, from $2.5 million in the prior year[148]. - Free Cash Flow (non-GAAP) for the 13 weeks ended July 30, 2022, was $(41.8) million, compared to $(30.6) million for the same period in 2021, reflecting a decline of approximately 36.4%[159]. Tax and Refunds - The company recorded an income tax expense of $933 million on a pre-tax loss of $(51,774) million for the 13 weeks ended July 30, 2022, resulting in an effective tax rate of (1.8)%[94]. - The company expects to receive additional tax refunds of approximately $6,881 million following refunds of $7,842 million received in Fiscal 2022 and $15,770 million on August 29, 2022[96]. - Income tax expense for the 13 weeks ended July 30, 2022, was $0.9 million on a pre-tax loss of $(51.8) million, resulting in an effective tax rate of (1.8)%[148]. Market and Operational Challenges - The company continues to face significant price competition in the textbook and course materials market, with students being highly price sensitive[113]. - The broader macroeconomic global supply chain issues have impacted the company's ability to source textbooks and school supplies[113]. - Enrollment trends at community colleges are negatively impacted by COVID-19 concerns and a decline in the U.S. birth rate, leading to fewer students in the traditional college age group[111]. - The company faces risks associated with public health crises, including the COVID-19 pandemic, which may impact overall demand for its products and services[179]. - There is a risk of decreased college enrollment or reduced funding available for students, which could negatively affect sales[179]. Digital Strategy and Initiatives - The company aims to expand its e-commerce capabilities through a partnership with Fanatics, enhancing product assortment and digital marketing tools[99]. - The implementation of the company's digital strategy may not yield the expected growth in digital sales and profitability[179]. - The company plans to continue focusing on digital initiatives and enhancements to internal systems and its website as part of its capital expenditures strategy[159]. Inventory and Capital Expenditures - The company reported a merchandise inventory loss of $434,000 for the 13 weeks ended July 31, 2021, which was not present in the current year[156]. - Total capital expenditures for the 13 weeks ended July 30, 2022, were $9.7 million, down from $11.4 million in the same period last year, a decrease of about 14.5%[159]. Employee and Operational Risks - The company may face challenges in attracting and retaining employees, which could affect operations[179]. - Risks associated with data privacy, information security, and intellectual property could impact the company's performance[179]. - The company is subject to potential disruptions in its information technology systems due to malware, viruses, or hacking attacks[179].