hhgregg Inc. (HGG, Financial) filed Quarterly Report for the period ended 2010-06-30.
Hhgregg Inc. has a market cap of $839.5 million; its shares were traded at around $21.3 with a P/E ratio of 21.6 and P/S ratio of 0.5. HGG is in the portfolios of Ron Baron of Baron Funds.
Net income was $2.7 million for the three months ended June 30, 2010, or $0.07 of net income per diluted share, compared with net income of $1.5 million, or $0.04 of net income per diluted share, for the three months ended June 30, 2009. The 85.5% increase in net income for the three month period ended June 30, 2010 as compared to the same period in the prior year was the result of an increase in net sales due to the net addition of 46 stores during the past 12 months, a comparable store sales increase of 6.3% and a modest increase in gross profit as a percentage of net sales.
Net sales for the three months ended June 30, 2010 increased 53.3% to $436.0 million compared to $284.4 million in the comparable prior year period. The increase in sales was primarily attributable to the net addition of 46 new stores during the 12 month period ended June 30, 2010 and a 6.3% increase in comparable store sales.
Our effective income tax rate for the three months ended June 30, 2010 decreased to 39.4% compared to 40.1% for the comparable prior year period. The decrease in our effective income tax rate for the three months ended June 30, 2010 compared to the comparable prior year period is primarily the result of changes in the expected annual effective state income tax rate for fiscal 2011.
borrowings is payable in defined periods, currently monthly, depending on our election of the banks prime rate or LIBOR plus an applicable margin, currently 200 basis points. The weighted average interest rate on the term loan as of June 30, 2010 and March 31, 2010 was 2.4% and 2.5%, respectively. The Company entered into an interest rate related derivative on $75 million of the Term B Facility which adjusts the effective weighted average interest rate on the Term B Facility at June 30, 2010 and March 31, 2010 to 3.9%.
Pursuant to Amendment No. 1, the borrowing base was modified to equal the sum of (i) the lesser of (a) 90% of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Prior to Amendment No. 1, the borrowing base equaled the sum of (i) the lesser of (a) 93% (96% during a seasonal period) of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Amendment No. 1 required payment to the incremental lenders of a commitment fee equal to 5.0% of the incremental commitment, or $1,250,000.
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Hhgregg Inc. has a market cap of $839.5 million; its shares were traded at around $21.3 with a P/E ratio of 21.6 and P/S ratio of 0.5. HGG is in the portfolios of Ron Baron of Baron Funds.
Highlight of Business Operations:
We focus closely managing our inventory, working capital and store development expenditures. As of March 31, 2010, our inventory averaged 6.7 turns per year over the prior three fiscal years. Also as of March 31, 2010, our working capital averaged 6.7%, expressed as a percentage of net sales, and our net capital expenditures averaged 2.7%, measured as a percentage of net sales, over the prior three fiscal years. These factors, combined with our strong store-level profitability, have contributed to the generation of significant free cash flow over the past three fiscal years. Historically, this has enabled us to de-leverage our balance sheet and internally fund a portion of our store growth.Net income was $2.7 million for the three months ended June 30, 2010, or $0.07 of net income per diluted share, compared with net income of $1.5 million, or $0.04 of net income per diluted share, for the three months ended June 30, 2009. The 85.5% increase in net income for the three month period ended June 30, 2010 as compared to the same period in the prior year was the result of an increase in net sales due to the net addition of 46 stores during the past 12 months, a comparable store sales increase of 6.3% and a modest increase in gross profit as a percentage of net sales.
Net sales for the three months ended June 30, 2010 increased 53.3% to $436.0 million compared to $284.4 million in the comparable prior year period. The increase in sales was primarily attributable to the net addition of 46 new stores during the 12 month period ended June 30, 2010 and a 6.3% increase in comparable store sales.
Our effective income tax rate for the three months ended June 30, 2010 decreased to 39.4% compared to 40.1% for the comparable prior year period. The decrease in our effective income tax rate for the three months ended June 30, 2010 compared to the comparable prior year period is primarily the result of changes in the expected annual effective state income tax rate for fiscal 2011.
borrowings is payable in defined periods, currently monthly, depending on our election of the banks prime rate or LIBOR plus an applicable margin, currently 200 basis points. The weighted average interest rate on the term loan as of June 30, 2010 and March 31, 2010 was 2.4% and 2.5%, respectively. The Company entered into an interest rate related derivative on $75 million of the Term B Facility which adjusts the effective weighted average interest rate on the Term B Facility at June 30, 2010 and March 31, 2010 to 3.9%.
Pursuant to Amendment No. 1, the borrowing base was modified to equal the sum of (i) the lesser of (a) 90% of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Prior to Amendment No. 1, the borrowing base equaled the sum of (i) the lesser of (a) 93% (96% during a seasonal period) of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Amendment No. 1 required payment to the incremental lenders of a commitment fee equal to 5.0% of the incremental commitment, or $1,250,000.
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