Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2016 | Aug. 01, 2016 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | HGG | |
Entity Registrant Name | HHGREGG, INC. | |
Entity Central Index Key | 1,396,279 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,798,354 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 423,572 | $ 441,063 |
Cost of goods sold | 292,063 | 306,706 |
Gross profit | 131,509 | 134,357 |
Selling, general and administrative expenses | 108,109 | 111,104 |
Net advertising expense | 22,869 | 23,054 |
Depreciation and amortization expense | 6,978 | 8,369 |
Loss from operations | (6,447) | (8,170) |
Other expense (income): | ||
Interest expense | 785 | 590 |
Interest income | (5) | (5) |
Total other expense | 780 | 585 |
Loss before income taxes | (7,227) | (8,755) |
Income taxes | 0 | 0 |
Net loss | $ (7,227) | $ (8,755) |
Net loss per share | ||
Basic (in dollars per share) | $ (0.26) | $ (0.32) |
Diluted (in dollars per share) | $ (0.26) | $ (0.32) |
Weighted average shares outstanding-basic (shares) | 27,741,261 | 27,680,209 |
Weighted average shares outstanding-diluted (shares) | 27,741,261 | 27,680,209 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Current assets: | ||
Cash | $ 1,214 | $ 3,703 |
Accounts receivable—trade, less allowances of $3 and $5 as of June 30, 2016 and March 31, 2016, respectively | 17,131 | 11,106 |
Accounts receivable—other | 18,672 | 14,937 |
Merchandise inventories, net | 292,025 | 256,559 |
Prepaid expenses and other current assets | 10,021 | 6,333 |
Income tax receivable | 1,107 | 1,130 |
Total current assets | 340,170 | 293,768 |
Net property and equipment | 85,236 | 87,472 |
Deferred financing costs, net | 2,432 | 1,257 |
Other assets | 3,239 | 2,855 |
Total long-term assets | 90,907 | 91,584 |
Total assets | 431,077 | 385,352 |
Current liabilities: | ||
Accounts payable | 145,383 | 107,474 |
Line of credit | 0 | 0 |
Customer deposits | 54,682 | 43,235 |
Accrued liabilities | 49,466 | 43,370 |
Total current liabilities | 249,531 | 194,079 |
Long-term liabilities: | ||
Deferred rent | 56,598 | 59,101 |
Other long-term liabilities | 10,381 | 10,818 |
Total long-term liabilities | 66,979 | 69,919 |
Total liabilities | 316,510 | 263,998 |
Stockholders’ equity: | ||
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2016 and March 31, 2016, respectively | 0 | 0 |
Common stock, par value $.0001; 150,000,000 shares authorized; 41,291,415 and 41,204,660 shares issued; and 27,794,733 and 27,707,978 outstanding as of June 30, 2016 and March 31, 2016, respectively | 4 | 4 |
Additional paid-in capital | 304,765 | 304,325 |
Accumulated deficit | (39,974) | (32,747) |
Common stock held in treasury at cost 13,496,682, shares as of June 30, 2016 and March 31, 2016 | (150,228) | (150,228) |
Total stockholders’ equity | 114,567 | 121,354 |
Total liabilities and stockholders’ equity | $ 431,077 | $ 385,352 |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable-trade, allowances | $ 3 | $ 5 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 41,291,415 | 41,204,660 |
Common stock, outstanding | 27,794,733 | 27,707,978 |
Common stock held in treasury at cost, shares | 13,496,682 | 13,496,682 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (7,227) | $ (8,755) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 6,978 | 8,369 |
Amortization of deferred financing costs | 135 | 135 |
Stock-based compensation | 440 | 898 |
Loss on early extinguishment of debt | 126 | 0 |
Gain on sales of property and equipment | (63) | (78) |
Tenant allowances received from landlords | 0 | 580 |
Changes in operating assets and liabilities: | ||
Accounts receivable—trade | (6,025) | (5,277) |
Accounts receivable—other | (3,735) | 46 |
Merchandise inventories | (35,466) | (67,082) |
Income tax receivable | 23 | (19) |
Prepaid expenses and other assets | (4,004) | (3,645) |
Accounts payable | 44,905 | 55,081 |
Customer deposits | 11,447 | 995 |
Accrued liabilities | 6,096 | 5,438 |
Deferred rent | (2,503) | (1,848) |
Other long-term liabilities | (370) | (1,072) |
Net cash provided by (used in) operating activities | 10,757 | (16,234) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3,910) | (4,304) |
Proceeds from sales of property and equipment | 4 | 11 |
Purchases of corporate-owned life insurance | (68) | (73) |
Net cash used in investing activities | (3,974) | (4,366) |
Cash flows from financing activities: | ||
Net repayments on inventory financing facility | (7,836) | (59) |
Payment of financing costs | (1,436) | 0 |
Net cash used in financing activities | (9,272) | (59) |
Net decrease in cash and cash equivalents | (2,489) | (20,659) |
Cash and cash equivalents | ||
Beginning of period | 3,703 | 30,401 |
End of period | 1,214 | 9,742 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 647 | 459 |
Income taxes (received) paid | (23) | 19 |
Capital expenditures included in accounts payable | $ 2,105 | $ 1,352 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Total | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Common Stock Held in Treasury |
Beginning Balance at Mar. 31, 2016 | $ 121,354 | $ 4 | $ 0 | $ 304,325 | $ (32,747) | $ (150,228) |
Beginning Balance (in shares) at Mar. 31, 2016 | 27,707,978 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (7,227) | (7,227) | ||||
Vesting of RSUs, net of tax withholdings (in shares) | 86,755 | |||||
Stock compensation expense | 440 | 440 | ||||
Ending Balance at Jun. 30, 2016 | $ 114,567 | $ 4 | $ 0 | $ 304,765 | $ (39,974) | $ (150,228) |
Ending Balance (in shares) at Jun. 30, 2016 | 27,794,733 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Description of Business hhgregg, Inc. (“hhgregg” or the “Company”) is an appliance, electronics and furniture retailer that is committed to providing customers with a truly differentiated purchase experience through superior customer service, knowledgeable sales associates and the highest quality product selections. Founded in 1955, hhgregg is a multi-regional retailer with 226 brick-and-mortar stores in 20 states that also offers market-leading global and local brands at value prices nationwide via hhgregg.com. The Company reports its results as one reportable segment. Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all necessary adjustments, which are of a normal recurring nature, for a fair presentation of such data. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of hhgregg and the notes thereto for the fiscal year ended March 31, 2016 , included in the Company’s Annual Report on Form 10-K filed with the SEC on May 19, 2016 . The consolidated results of operations, financial position and cash flows for interim periods are not necessarily indicative of those to be expected for a full year. The Company has made a number of estimates and assumptions relating to the assets and liabilities and the reporting of sales and expenses to prepare these unaudited condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of hhgregg and its wholly-owned subsidiary, Gregg Appliances, Inc. (“Gregg Appliances”). Gregg Appliances has a wholly-owned subsidiary, HHG Distributing LLC (“HHG Distributing”), which has no assets or operations. Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting, ("ASU 2016-09") which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes certain aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years with early adoption permitted. The Company is evaluating the effect that ASU No. 2016-09 will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU No. 2016-02"), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases on the balance sheet. This guidance also requires disclosures about the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) to clarify the principles used to recognize revenue for all entities. The original standard was to be effective for fiscal years beginning after December 15, 2016; however, in July 2015, the FASB approved a one-year deferral of this standard, with a new effective date for fiscal years beginning after December 15, 2017. While the Company is still in the process of evaluating the impact, if any, the adoption of this guidance will have on its financial position and results of operations, the Company does not currently expect a material impact on its consolidated financial statements. Recently Adopted Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which will require entities to present deferred tax assets ("DTA") and deferred tax liabilities ("DTL") as non-current in a classified balance sheet. The ASU simplified the current guidance, which requires entities to separately present DTAs and DTLs as current and non-current in a classified balance sheet. This standard is effective for annual periods and interim periods within those fiscal years, beginning after December 15, 2016 but permits entities to early adopt at the beginning of any interim or annual period. The Company adopted ASU 2015-17 in the period ending December 31, 2015, prospectively, as it believes the adoption of this standard reduces complexity of its condensed consolidated financial statements as well as enhances the usefulness of the related financial information. Prior periods presented in the condensed consolidated balance sheet are not retrospectively adjusted. In April 2015, the FASB issued an accounting pronouncement, FASB ASU 2015-3, related to the presentation of debt issuance costs (FASB ASC Subtopic 835-30). This standard requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. These costs continue to be amortized to interest expense using the effective interest method. In August 2015, FASB issued ASU 2015-15 Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. These pronouncements were effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, and retrospective adoption was required. The Company adopted the pronouncements for its fiscal year beginning April 1, 2016 for costs associated with their line of credit facility. The Company's accounting policy for these costs did not change with the adoption of the new pronouncements. The Company defers such costs and present them as an asset on the balance sheet and amortize the costs ratably over the term of the arrangement to interest expense. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable—trade, accounts receivable—other, accounts payable and customer deposits approximate fair value because of the short maturity of these instruments. Any outstanding amount on the Company’s line of credit approximates fair value as the interest rate is market based. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following at June 30, 2016 and March 31, 2016 (in thousands): June 30, March 31, Machinery and equipment $ 23,697 $ 23,700 Store fixtures and furniture 150,950 150,390 Vehicles 1,789 1,757 Signs 11,942 11,959 Leasehold improvements 104,234 103,908 Construction in progress 3,071 1,792 295,683 293,506 Less accumulated depreciation and amortization (210,447 ) (206,034 ) Net property and equipment $ 85,236 $ 87,472 |
Net Loss per Share
Net Loss per Share | 3 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share Net loss per basic and diluted share is calculated based on the weighted-average number of outstanding common shares. When the Company reports net income, the calculation of net income per diluted share excludes shares underlying outstanding stock options and restricted stock units with exercise prices that exceed the average market price of the Company’s common stock for the period and certain options and restricted stock units with unrecognized compensation cost, as the effect would be antidilutive. Potential dilutive common shares are composed of shares of common stock issuable upon the exercise of stock options and vesting of restricted stock units. For the three months ended June 30, 2016 and 2015 , the diluted loss per common share calculation represents the weighted average common shares outstanding with no additional dilutive shares as the Company incurred a net loss for the periods and such shares would be antidilutive. The following table presents net loss per basic and diluted share for the three months ended June 30, 2016 and 2015 (in thousands, except share and per share amounts): Three Months Ended June 30, 2016 June 30, 2015 Net loss (A) $ (7,227 ) $ (8,755 ) Weighted average outstanding shares of common stock (B) 27,741,261 27,680,209 Common stock and potential dilutive common shares (C) 27,741,261 27,680,209 Net loss per share: Basic (A/B) $ (0.26 ) $ (0.32 ) Diluted (A/C) $ (0.26 ) $ (0.32 ) Antidilutive shares not included in the net loss per diluted share calculation for the three months ended June 30, 2016 and 2015 were 2,799,221 and 3,537,511 , respectively. |
Inventories
Inventories | 3 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Net merchandise inventories consisted of the following at June 30, 2016 and March 31, 2016 (in thousands): June 30, March 31, Appliances $ 157,013 $ 126,025 Consumer electronics 114,488 109,418 Home products 20,524 21,116 Net merchandise inventory $ 292,025 $ 256,559 |
Debt
Debt | 3 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt A summary of debt at June 30, 2016 and March 31, 2016 is as follows (in thousands): June 30, March 31, Line of credit $ — $ — On June 28, 2016, Gregg Appliances entered into Amendments No. 2 & 3 to the Amended and Restated Loan and Security Agreement (the “Amended Facility”) which amended the maximum amount available under the Amended Facility from $400 million to $300 million , comprised of a $20 million first-in last-out revolving tranche ("the FILO") and a $280 million revolver, subject to borrowing base availability, and extended the maturity date from July 29, 2018 to June 28, 2021 . Pursuant to the Amended Facility, the first $20 million of borrowings are applied to the FILO, subject to a borrowing base equal to the sum of (i) 5% of the eligible credit card A/R and (ii) 10% of the net orderly liquidation value of eligible inventory, in each case subject to customary reserves and eligibility criteria. Under the FILO, the inventory advance rate is reduced by 0.5% per quarter to 6.0% and will remain at 6.0% unless the fixed charge coverage ratio is less than 1.0 x, then it will reduce by 0.5% each quarter to 5.0% . If the fixed charge coverage ratio is less than 1.0 x at that time, the inventory advance rate is reduced by 0.25% each quarter. Interest on the borrowings under the FILO are payable at a fluctuating rate based on the bank's prime rate or LIBOR plus an applicable margin based on the average quarterly excess availability. For borrowings greater than $20 million , the borrowing base is equal to the sum of (i) 90% of the amount of eligible commercial and credit card receivables of Gregg Appliances and (ii) 90% of the net recovery percentage multiplied by the value of eligible inventory consistent with the most recent appraisal of such eligible inventory. Interest on borrowings (other than Eurodollar rate borrowings) is payable monthly at a fluctuating rate based on the bank’s prime rate or LIBOR plus an applicable margin based on the average quarterly excess availability. Interest on Eurodollar rate borrowings is payable on the last day of each “interest period” applicable to such borrowing or on the three month anniversary of the beginning of such “interest period” for interest periods greater than three months. The Company pays an unused line fee at the unused line rate which is determined based on the amount of the daily average of the outstanding borrowings for the immediately preceding calendar quarter period (the “Daily Average”). For a Daily Average greater than or equal to 50% of the defined borrowing base, the unused line rate is 0.25% . For a Daily Average less than 50% of the defined borrowing base, the unused line rate is 0.375% . The Amended Facility is guaranteed by Gregg Appliances’ wholly-owned subsidiary, HHG Distributing, which has no assets or operations. The guarantee is full and unconditional, and Gregg Appliances has no other subsidiaries. Under the Amended Facility, Gregg Appliances is not required to comply with any financial maintenance covenant but Gregg Appliances is required to maintain “excess availability” of the greater of (i) 10% of the defined borrowing base or (ii) $15 million . Prior to Amendments No. 2 & 3, Gregg Appliances was not required to comply with any financial maintenance covenant unless “excess availability” was less than the greater of (i) 10.0% of the lesser of (A) the defined borrowing base or (B) the defined maximum credit or (ii) $20.0 million during the continuance of which event Gregg Appliances was subject to compliance with a fixed charge coverage ratio of 1.0 to 1.0 . If Gregg Appliances has “excess availability” of less than 15% , 12.5% prior to Amendments No. 2 & 3, of the lesser of (A) the defined borrowing base or (B) the defined maximum credit, it may have, in certain circumstances more specifically described in the Amended Facility, become subject to cash dominion control. The Amended Facility places limitations on the ability of Gregg Appliances to, among other things, incur debt, create other liens on its assets, make investments, sell assets, pay dividends, undertake transactions with affiliates, enter into merger transactions, enter into unrelated businesses, open collateral locations outside of the United States, or enter into consignment agreements or floor plan financing arrangements. The Amended Facility also contains various customary representations and warranties, financial and collateral reporting requirements and other affirmative and negative covenants. Gregg Appliances was in compliance with the restrictions and covenants of the Amended Facility at June 30, 2016 . As of June 30, 2016 and March 31, 2016 , Gregg Appliances had no borrowings outstanding under the Amended Facility. The total borrowing availability under the Amended Facility was $177.2 million and $139.9 million as of June 30, 2016 and March 31, 2016 , respectively. The Company typically borrows based on LIBOR. As of June 30, 2016 , the interest rate on the FILO based on LIBOR was 5.4% . The interest rate on the revolver based on LIBOR was 2.44% and 2.15% as of June 30, 2016 and March 31, 2016 , respectively. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation Stock Options Effective June 20, 2014, the Company adopted an Amendment to the hhgregg, Inc. 2007 Equity Incentive Plan which increased the number of shares of common stock reserved for issuance under the Plan to 9,000,000 . The following table summarizes the activity under the Company’s 2007 Equity Incentive Plan for the three months ended June 30, 2016 : Number of Options Outstanding Weighted Average Exercise Price per Share Outstanding at March 31, 2016 2,827,168 $ 11.86 Granted — — Exercised — — Forfeited (38,720 ) 7.12 Expired (814,633 ) 13.20 Outstanding at June 30, 2016 1,973,815 $ 11.40 During the three months ended June 30, 2016 , the Company did not grant options under the 2007 Equity Incentive Plan. Time Vested Restricted Stock Units During the three months ended June 30, 2016 , the Company granted 877,832 time vested restricted stock units (“RSUs”) under the 2007 Equity Incentive Plan to certain employees and directors of the Company. The RSUs vest in equal amounts over a three -year period beginning on the first anniversary of the date of grant. Upon vesting, the outstanding number of RSUs will be converted into shares of common stock. RSUs are forfeited if they have not vested before the participant's service to the Company terminates for any reason other than death or total permanent disability or certain other circumstances as described in such participant’s RSU agreement. Upon death or disability, the participant is entitled to receive a portion of the award based upon the period of time lapsed between the date of grant of the RSU and the termination of service as an employee or director. The fair value of RSU awards is based on the Company’s stock price at the close of the market on the date of grant. The weighted average grant date fair value for the RSUs issued during the three months ended June 30, 2016 was $1.62 . The following table summarizes RSU vesting activity for the three months ended June 30, 2016 : Shares Weighted Average Grant-Date Fair Value Nonvested at March 31, 2016 370,383 $ 4.83 Granted 877,832 1.62 Vested (107,138 ) 5.53 Forfeited (44,254 ) 2.36 Nonvested at June 30, 2016 1,096,823 $ 2.29 |
Contingencies
Contingencies | 3 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is engaged in various legal proceedings in the ordinary course of business and has certain unresolved claims pending. The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. However, management believes, based on the examination of these matters and experiences to date, that the ultimate liability, if any, in excess of amounts already provided for in the unaudited condensed consolidated financial statements is not likely to have a material effect on its consolidated financial position, results of operations or cash flows. The Company was the defendant in a class action lawsuit captioned, Dwain Underwood, on behalf of himself and all others similarly situated v. Gregg Appliances, Inc. and hhgregg, Inc ., filed in the Superior Court in Marion County, Indiana, where a former employee alleged that the Company breached a contract by failing to correctly calculate his (and other class members) incentive bonus. On July 9, 2014, the judge granted the plaintiff’s motion for class certification, and on July 17, 2015, the judge granted the plaintiff’s motion for summary judgment, although no finding on damages was made. The Company's interlocutory appeal to the Indiana Court of Appeals was accepted on October 23, 2015. On July 22, 2016, the Indiana Court of Appeals reversed the Superior Court's decision for summary judgment and directed that summary judgment be entered in the Company's favor. The plaintiff has 30 days to appeal the decision. The Company believes a loss is not probable, and thus, as of June 30, 2016, a liability has no t been recorded for this matter. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business hhgregg, Inc. (“hhgregg” or the “Company”) is an appliance, electronics and furniture retailer that is committed to providing customers with a truly differentiated purchase experience through superior customer service, knowledgeable sales associates and the highest quality product selections. Founded in 1955, hhgregg is a multi-regional retailer with 226 brick-and-mortar stores in 20 states that also offers market-leading global and local brands at value prices nationwide via hhgregg.com. The Company reports its results as one reportable segment. |
Interim Financial Information | Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all necessary adjustments, which are of a normal recurring nature, for a fair presentation of such data. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of hhgregg and the notes thereto for the fiscal year ended March 31, 2016 , included in the Company’s Annual Report on Form 10-K filed with the SEC on May 19, 2016 . The consolidated results of operations, financial position and cash flows for interim periods are not necessarily indicative of those to be expected for a full year. The Company has made a number of estimates and assumptions relating to the assets and liabilities and the reporting of sales and expenses to prepare these unaudited condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of hhgregg and its wholly-owned subsidiary, Gregg Appliances, Inc. (“Gregg Appliances”). Gregg Appliances has a wholly-owned subsidiary, HHG Distributing LLC (“HHG Distributing”), which has no assets or operations. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting, ("ASU 2016-09") which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes certain aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years with early adoption permitted. The Company is evaluating the effect that ASU No. 2016-09 will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU No. 2016-02"), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases on the balance sheet. This guidance also requires disclosures about the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) to clarify the principles used to recognize revenue for all entities. The original standard was to be effective for fiscal years beginning after December 15, 2016; however, in July 2015, the FASB approved a one-year deferral of this standard, with a new effective date for fiscal years beginning after December 15, 2017. While the Company is still in the process of evaluating the impact, if any, the adoption of this guidance will have on its financial position and results of operations, the Company does not currently expect a material impact on its consolidated financial statements. Recently Adopted Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which will require entities to present deferred tax assets ("DTA") and deferred tax liabilities ("DTL") as non-current in a classified balance sheet. The ASU simplified the current guidance, which requires entities to separately present DTAs and DTLs as current and non-current in a classified balance sheet. This standard is effective for annual periods and interim periods within those fiscal years, beginning after December 15, 2016 but permits entities to early adopt at the beginning of any interim or annual period. The Company adopted ASU 2015-17 in the period ending December 31, 2015, prospectively, as it believes the adoption of this standard reduces complexity of its condensed consolidated financial statements as well as enhances the usefulness of the related financial information. Prior periods presented in the condensed consolidated balance sheet are not retrospectively adjusted. In April 2015, the FASB issued an accounting pronouncement, FASB ASU 2015-3, related to the presentation of debt issuance costs (FASB ASC Subtopic 835-30). This standard requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. These costs continue to be amortized to interest expense using the effective interest method. In August 2015, FASB issued ASU 2015-15 Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. These pronouncements were effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, and retrospective adoption was required. The Company adopted the pronouncements for its fiscal year beginning April 1, 2016 for costs associated with their line of credit facility. The Company's accounting policy for these costs did not change with the adoption of the new pronouncements. The Company defers such costs and present them as an asset on the balance sheet and amortize the costs ratably over the term of the arrangement to interest expense. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following at June 30, 2016 and March 31, 2016 (in thousands): June 30, March 31, Machinery and equipment $ 23,697 $ 23,700 Store fixtures and furniture 150,950 150,390 Vehicles 1,789 1,757 Signs 11,942 11,959 Leasehold improvements 104,234 103,908 Construction in progress 3,071 1,792 295,683 293,506 Less accumulated depreciation and amortization (210,447 ) (206,034 ) Net property and equipment $ 85,236 $ 87,472 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Income Loss Per Basic and Diluted Share | The following table presents net loss per basic and diluted share for the three months ended June 30, 2016 and 2015 (in thousands, except share and per share amounts): Three Months Ended June 30, 2016 June 30, 2015 Net loss (A) $ (7,227 ) $ (8,755 ) Weighted average outstanding shares of common stock (B) 27,741,261 27,680,209 Common stock and potential dilutive common shares (C) 27,741,261 27,680,209 Net loss per share: Basic (A/B) $ (0.26 ) $ (0.32 ) Diluted (A/C) $ (0.26 ) $ (0.32 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Net Merchandise Inventories | Net merchandise inventories consisted of the following at June 30, 2016 and March 31, 2016 (in thousands): June 30, March 31, Appliances $ 157,013 $ 126,025 Consumer electronics 114,488 109,418 Home products 20,524 21,116 Net merchandise inventory $ 292,025 $ 256,559 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Debt | A summary of debt at June 30, 2016 and March 31, 2016 is as follows (in thousands): June 30, March 31, Line of credit $ — $ — |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Plans Activity | The following table summarizes the activity under the Company’s 2007 Equity Incentive Plan for the three months ended June 30, 2016 : Number of Options Outstanding Weighted Average Exercise Price per Share Outstanding at March 31, 2016 2,827,168 $ 11.86 Granted — — Exercised — — Forfeited (38,720 ) 7.12 Expired (814,633 ) 13.20 Outstanding at June 30, 2016 1,973,815 $ 11.40 |
Summary of RSU Vesting Activity | The following table summarizes RSU vesting activity for the three months ended June 30, 2016 : Shares Weighted Average Grant-Date Fair Value Nonvested at March 31, 2016 370,383 $ 4.83 Granted 877,832 1.62 Vested (107,138 ) 5.53 Forfeited (44,254 ) 2.36 Nonvested at June 30, 2016 1,096,823 $ 2.29 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Jun. 30, 2016stateStoreSegment | |
Accounting Policies [Abstract] | |
Number of stores | Store | 226 |
Number of states | state | 20 |
Number of reportable segments | Segment | 1 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 295,683 | $ 293,506 |
Less accumulated depreciation and amortization | (210,447) | (206,034) |
Net property and equipment | 85,236 | 87,472 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 23,697 | 23,700 |
Store fixtures and furniture | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 150,950 | 150,390 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 1,789 | 1,757 |
Signs | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 11,942 | 11,959 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 104,234 | 103,908 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 3,071 | $ 1,792 |
Net Loss per Share - Net loss p
Net Loss per Share - Net loss per basic and diluted share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (7,227) | $ (8,755) |
Weighted average outstanding shares of common stock | 27,741,261 | 27,680,209 |
Common stock and potential dilutive common shares | 27,741,261 | 27,680,209 |
Net loss per share: | ||
Basic (in dollars per share) | $ (0.26) | $ (0.32) |
Diluted (in dollars per share) | $ (0.26) | $ (0.32) |
Net Loss per Share - Narrative
Net Loss per Share - Narrative (Details) - shares | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares not included in the net income per diluted share calculation, shares | 2,799,221 | 3,537,511 |
Inventories - Net Merchandise I
Inventories - Net Merchandise Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Schedule of Inventory [Line Items] | ||
Net merchandise inventory | $ 292,025 | $ 256,559 |
Appliances | ||
Schedule of Inventory [Line Items] | ||
Net merchandise inventory | 157,013 | 126,025 |
Consumer electronics | ||
Schedule of Inventory [Line Items] | ||
Net merchandise inventory | 114,488 | 109,418 |
Home products | ||
Schedule of Inventory [Line Items] | ||
Net merchandise inventory | $ 20,524 | $ 21,116 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) | Jun. 30, 2016 | Mar. 31, 2016 |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Line of Credit | $ 0 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Jun. 28, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 27, 2016 | Mar. 31, 2016 |
Debt Instrument [Line Items] | |||||
Capacity for borrowings | $ 300,000,000 | $ 400,000,000 | |||
Facility expiration date | Jun. 28, 2021 | ||||
Financial maintenance covenant, percentage of excess availability | 10.00% | 10.00% | |||
Financial maintenance covenant, excess availability | $ 15,000,000 | $ 20,000,000 | |||
Excess availability, less than | 15.00% | 12.50% | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Capacity for borrowings | $ 280,000,000 | ||||
Amount of the eligible commercial and credit card receivables as a percent | 90.00% | ||||
Percentage of the net recovery percentage | 90.00% | ||||
Borrowings outstanding | $ 0 | $ 0 | |||
Total borrowing availability | $ 177,200,000 | $ 139,900,000 | |||
First-in Last-out Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Capacity for borrowings | $ 20,000,000 | ||||
Percent of eligible credit card A/R | 5.00% | ||||
Percent of net orderly liquidation value | 10.00% | ||||
Fixed Charge Coverage Ratio One | First-in Last-out Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Inventory advance rate reduction percent | 0.50% | ||||
Inventory advance rate percent | 6.00% | ||||
Fixed charge coverage ratio | 1 | ||||
Fixed Charge Coverage Ratio Two | First-in Last-out Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Inventory advance rate reduction percent | 0.50% | ||||
Inventory advance rate percent | 5.00% | ||||
Fixed charge coverage ratio | 1 | ||||
Fixed Charge Coverage Ratio Three | First-in Last-out Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Inventory advance rate reduction percent | 0.25% | ||||
Lower Limit | |||||
Debt Instrument [Line Items] | |||||
Unused line rate | 0.25% | ||||
Upper Limit | |||||
Debt Instrument [Line Items] | |||||
Unused line rate | 0.375% | ||||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Fixed charge coverage ratio | 1 | ||||
Maximum | |||||
Debt Instrument [Line Items] | |||||
Defined borrowing base as a percent | 50.00% | ||||
LIBOR | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Interest rate percent | 2.44% | 2.15% | |||
LIBOR | First-in Last-out Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Interest rate percent | 5.40% |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Stock Option Plans Activity (Details) - Stock Options | 3 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Number of Options Outstanding, shares | |
Beginning Balance, shares | shares | 2,827,168 |
Granted, shares | shares | 0 |
Exercised, shares | shares | 0 |
Forfeited, shares | shares | (38,720) |
Expired, shares | shares | (814,633) |
Ending Balance, shares | shares | 1,973,815 |
Weighted Average Exercise Price per Share (dollars per share) | |
Beginning Balance (dollars per share) | $ / shares | $ 11.86 |
Granted (dollars per share) | $ / shares | 0 |
Exercised (dollars per share) | $ / shares | 0 |
Forfeited (dollars per share) | $ / shares | 7.12 |
Expired (dollars per share) | $ / shares | 13.20 |
Ending Balance (dollars per share) | $ / shares | $ 11.40 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - Equity Incentive Plan 2007 - $ / shares | 3 Months Ended | |
Jun. 30, 2016 | Jun. 20, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares of common stock reserved for issuance | 9,000,000 | |
Time Vested Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, shares | 877,832 | |
Restricted stock units, vesting term (in years) | 3 years | |
Restricted stock units, weighted average grant date fair value (dollars per share) | $ 1.62 |
Stock-based Compensation - Su30
Stock-based Compensation - Summary of RSU Vesting Activity (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Shares | |
Beginning Balance, shares | shares | 370,383 |
Granted, shares | shares | 877,832 |
Vested, shares | shares | (107,138) |
Forfeited, shares | shares | (44,254) |
Ending Balance, shares | shares | 1,096,823 |
Weighted Average Grant-Date Fair Value (dollars per share) | |
Beginning Balance (dollars per share) | $ / shares | $ 4.83 |
Granted (dollars per share) | $ / shares | 1.62 |
Vested (dollars per share) | $ / shares | 5.53 |
Forfeited (dollars per share) | $ / shares | 2.36 |
Ending Balance (dollars per share) | $ / shares | $ 2.29 |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) - Dwain Underwood, on behalf of himself and all others similarly situated v. Gregg Appliances, Inc. and hhgregg, Inc. - USD ($) | Jul. 22, 2016 | Jun. 30, 2016 |
Pending Litigation | ||
Loss Contingencies [Line Items] | ||
Potential liability | $ 0 | |
Subsequent Event | Settled Litigation | ||
Loss Contingencies [Line Items] | ||
Period of appeal | 30 days |