EX-99.2 3 d895340dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data) (Unaudited)

 

 

 

     13 weeks ended     39 weeks ended  
     January 25,
2025
    January 27,
2024
    January 25,
2025
    January 27,
2024
 

Sales:

        

Product sales and other

   $ 423,163     $ 415,375     $ 1,233,763     $ 1,237,723  

Rental income

     43,162       41,298       98,115       93,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total sales

     466,325       456,673       1,331,878       1,331,213  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales (exclusive of depreciation and amortization expense):

        

Product and other cost of sales

     344,616       332,728       996,133       991,695  

Rental cost of sales

     25,330       23,909       54,517       52,606  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of sales

     369,946       356,637       1,050,650       1,044,301  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     96,379       100,036       281,228       286,912  
  

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expenses

     71,561       79,756       211,524       243,193  

Depreciation and amortization expense

     7,814       10,148       29,401       30,576  

Impairment loss (non-cash) (a)

     1,713       5,798       1,713       5,798  

Loss on extinguishment of debt (a)

     —        —        55,233       —   

Restructuring and other charges (a)

     (7,568     3,413       (4,100     12,320  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     22,859       921       (12,543     (4,975
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

     5,083       10,620       18,164       29,538  

Income (loss) from continuing operations before income taxes

     17,776       (9,699     (30,707     (34,513

Income tax expense (benefit)

     10,664       229       11,925       532  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ 7,112     $ (9,928   $ (42,632   $ (35,045

Income (loss) from discontinued operations, net of tax of $0, $0, $0 and $20, respectively

   $ —      $ 289     $ —      $ (802
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 7,112     $ (9,639   $ (42,632   $ (35,847
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per Common Stock:

        

Basic:

        

Continuing operations

   $ 0.23     $ (3.71   $ (1.81   $ (13.18

Discontinued operations

   $ —      $ 0.11     $ —      $ (0.30
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Basic Earnings (loss) per share

   $ 0.23     $ (3.60   $ (1.81   $ (13.48
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding—Basic

     30,508       2,673       23,515       2,659  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

Continuing operations

   $ 0.23     $ (3.71   $ (1.81   $ (13.18

Discontinued operations

   $ —      $ 0.11     $ —      $ (0.30
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Diluted Earnings (Loss) per share

   $ 0.23     $ (3.60   $ (1.81   $ (13.48
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding—Diluted

     30,662       2,673       23,515       2,659  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

For additional information, see the Notes in the Non-GAAP disclosure information of this Press Release.


     13 weeks ended     39 weeks ended  
     January 25,
2025
    January 27,
2024
    January 25,
2025
    January 27,
2024
 

Percentage of sales:

        

Sales:

        

Product sales and other

     90.7     91.0     92.6     93.0

Rental income

     9.3     9.0     7.4     7.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Total sales

     100.0     100.0     100.0     100.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales (exclusive of depreciation and amortization expense):

        

Product and other cost of sales (a)

     81.4     80.1     80.7     80.1

Rental cost of sales (a)

     58.7     57.9     55.6     56.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of sales

     79.3     78.1     78.9     78.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     20.7     21.9     21.1     21.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expenses

     15.3     17.5     15.9     18.3

Depreciation and amortization expense

     1.7     2.2     2.2     2.3

Impairment loss (non-cash)

     0.4     1.3     0.1     0.4

Loss on extinguishment of debt

     —      —      4.1     — 

Restructuring and other charges

     (1.6 )%      0.7     (0.3 )%      0.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss) from continuing operations

     4.9     0.2     (0.9 )%      (0.3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Represents the percentage these costs bear to the related sales, instead of total sales.


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data) (Unaudited)

 

 

 

     January 25,
2025
    January 27,
2024
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 9,185     $ 8,123  

Receivables, net

     354,241       315,126  

Merchandise inventories, net

     326,825       341,544  

Textbook rental inventories

     41,033       44,521  

Prepaid expenses and other current assets

     26,729       54,337  
  

 

 

   

 

 

 

Total current assets

     758,013       763,651  
  

 

 

   

 

 

 

Property and equipment, net

     41,956       57,273  

Operating lease right-of-use assets

     180,710       220,238  

Intangible assets, net

     81,630       97,947  

Deferred tax assets, net

     1,055       —   

Other noncurrent assets

     24,217       12,488  
  

 

 

   

 

 

 

Total assets

   $ 1,087,581     $ 1,151,597  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 303,577     $ 343,100  

Accrued liabilities

     130,069       156,874  

Current operating lease liabilities

     101,062       125,545  

Short-term borrowings

     —        224,067  
  

 

 

   

 

 

 

Total current liabilities

     534,708       849,586  
  

 

 

   

 

 

 

Long-term deferred taxes, net

     —        2,010  

Long-term operating lease liabilities

     121,835       155,226  

Other long-term liabilities

     6,521       17,451  

Long-term borrowings

     141,200       30,191  
  

 

 

   

 

 

 

Total liabilities

     804,264       1,054,464  
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $0.01 par value; authorized, 5,000 shares; issued and outstanding, none

     —        —   

Common stock, $0.01 par value; authorized, 200,000 shares; issued, 34,081 and 558 shares, respectively; outstanding, 34,054 and 531 shares, respectively

     341       558  

Additional paid-in-capital

     1,004,731       748,330  

Accumulated deficit

     (699,199     (629,203

Treasury stock, at cost

     (22,556     (22,552
  

 

 

   

 

 

 

Total stockholders’ equity

     283,317       97,133  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,087,581     $ 1,151,597  
  

 

 

   

 

 

 


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Non-GAAP Information (a)

(In thousands) (Unaudited)

 

 

 

Consolidated Adjusted Earnings (non-GAAP) (a) - Continuing Operations    13 weeks ended     39 weeks ended  
     January 25,
2025
    January 27,
2024
    January 25,
2025
    January 27,
2024
 

Net income (loss) from continuing operations

   $ 7,112     $ (9,928   $ (42,632   $ (35,045

Reconciling items (below)

     (3,294     10,023       55,799       20,686  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (non-GAAP)

   $ 3,818     $ 95     $ 13,167     $ (14,359
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciling items

        

Impairment loss (non-cash) (b)

   $ 1,713     $ 5,798     $ 1,713     $ 5,798  

Loss on extinguishment of debt (b)

   $ —      $ —      $ 55,233     $ —   

Restructuring and other charges (c)

     (7,568     3,413       (4,100     12,320  

Stock-based compensation expense (non-cash)

     2,561       812       2,953       2,568  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciling items (d)

   $ (3,294   $ 10,023     $ 55,799     $ 20,686  
  

 

 

   

 

 

   

 

 

   

 

 

 
Consolidated Adjusted EBITDA (non-GAAP) (a) - Continuing Operations    13 weeks ended     39 weeks ended  
     January 25,
2025
    January 27,
2024
    January 25,
2025
    January 27,
2024
 

Net income (loss) from continuing operations

   $ 7,112     $ (9,928   $ (42,632   $ (35,045

Add:

        

Depreciation and amortization expense

     7,814       10,148       29,401       30,576  

Interest expense, net

     5,083       10,620       18,164       29,538  

Income tax expense

     10,664       229       11,925       532  

Impairment loss (non-cash)

     1,713       5,798       1,713       5,798  

Loss on extinguishment of debt (b)

     —        —        55,233       —   

Restructuring and other charges (c)

     (7,568     3,413       (4,100     12,320  

Stock-based compensation expense (non-cash)

     2,561       812       2,953       2,568  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (Non-GAAP)—Continuing Operations

   $ 27,379     $ 21,092     $ 72,657     $ 46,287  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

For additional information, see “Use of Non-GAAP Financial Information” in the Non-GAAP disclosure information of this Press Release.

 

(b)

We recognized a loss on extinguishment of debt of $55.2 million in the condensed consolidated statement of operations in connection with the June 10, 2024 Term Loan debt conversion, which represents the difference between the debt fair value and net carrying value, plus unamortized deferred financing costs related to the Term Loan.

 

(c)

Restructuring and other charges are comprised primarily of professional service costs for restructuring and process improvements, including costs related to evaluating strategic alternatives, and severance and other employee termination and benefit costs associated with the elimination of various positions as part of cost reduction objectives.

 

(d)

There is no pro forma income effect of the non-GAAP items.


Free Cash Flow (non-GAAP) (a)

 

     13 weeks ended     39 weeks ended  
Dollars in thousands    January 25,
2025
    January 27,
2024
    January 25,
2025
    January 27,
2024
 

Net cash flows used in operating activities from continuing operations (a)

   $ (41,945   $ (36,061   $ (138,527   $ (83,221

Less:

        

Capital expenditures (b)

     2,772       3,263       9,300       11,459  

Cash interest

     4,633       5,668       14,499       19,640  

Cash taxes

     67       (118     (2,018     270  
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow (non-GAAP)

   $ (49,417   $ (44,874   $ (160,308   $ (114,590
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

For additional information, see “Use of Non-GAAP Financial Information” in the Non-GAAP disclosure information of this Press Release.

(b)

Purchases of property and equipment are also referred to as capital expenditures. Our investing activities consist principally of capital expenditures for contractual capital investments associated with renewing existing contracts, new store construction, digital initiatives and enhancements to internal systems and our website. The following table provides the components of total purchases of property and equipment:

 

Capital Expenditures    13 weeks ended      39 weeks ended  
Dollars in thousands    January 25,
2025
     January 27,
2024
     January 25,
2025
     January 27,
2024
 

Physical store capital expenditures

   $ 1,219      $ 1,158      $ 4,569      $ 5,106  

Product and system development

     1,378        1,588        4,086        5,048  

Other

     175        517        645        1,305  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Capital Expenditures

   $ 2,772      $ 3,263      $ 9,300      $ 11,459  
  

 

 

    

 

 

    

 

 

    

 

 

 


Use of Non-GAAP Financial Information—Adjusted Earnings, Adjusted EBITDA, and Free Cash Flow

To supplement the Company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses the financial measures of Adjusted Earnings, Adjusted EBITDA, and Free Cash Flow, which are non-GAAP financial measures under Securities and Exchange Commission (the “SEC”) regulations. We define Adjusted Earnings as net income (loss) from continuing operations adjusted for certain reconciling items that are subtracted from or added to net income (loss) from continuing operations. We define Adjusted EBITDA as net income (loss) from continuing operations plus (1) depreciation and amortization; (2) interest expense, net and (3) income taxes, (4) as adjusted for additional items that are subtracted from or added to net income (loss) from continuing operations. We define Free Cash Flow as Cash Flows from Operating Activities less (1) capital expenditures; (2) cash interest and (3) cash taxes.

These non-GAAP measures have been reconciled to the most comparable financial measures presented in accordance with GAAP as follows: the reconciliation of Adjusted Earnings to net income (loss); the reconciliation of consolidated Adjusted EBITDA to consolidated net income (loss); and the reconciliation of Free Cash Flow to Cash Flows from Operating Activities. All of the items included in the reconciliations are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance.

These non-GAAP financial measures are not intended as substitutes for and should not be considered superior to measures of financial performance prepared in accordance with GAAP. In addition, the Company’s use of these non-GAAP financial measures may be different from similarly named measures used by other companies, limiting their usefulness for comparison purposes.

We review these non-GAAP financial measures as internal measures to evaluate our performance at a consolidated level to manage our operations. We believe that these measures are useful performance measures which are used by us to facilitate a comparison of our on-going operating performance on a consistent basis from period-to-period. We believe that these non-GAAP financial measures provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone, as they exclude certain items that management believes do not reflect the ordinary performance of our operations in a particular period. Our Board of Directors and management also use Adjusted EBITDA at a consolidated level as one of the primary methods for planning and forecasting expected performance, for evaluating on a quarterly and annual basis actual results against such expectations, and as a measure for performance incentive plans. We believe that the inclusion of Adjusted Earnings and Adjusted EBITDA results provides investors useful and important information regarding our operating results, in a manner that is consistent with management’s evaluation of business performance. We believe that Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements and assists investors in their understanding of our operating profitability and liquidity as we manage the business to maximize margin and cash flow.

The Company urges investors to carefully review the GAAP financial information included as part of the Company’s Form 10-K dated April 27, 2024 filed with the SEC on July 1, 2024, (as updated through our Current Report on Form 8-K filed with the SEC on December 11, 2024). The Company also urges investors to carefully review the financial information included as part of the Company’s Quarterly Reports on Form 10-Q for the period ended July 27, 2024, filed with the SEC on September 10, 2024, and for the period ended October 26, 2024, filed with the SEC on December 9, 2024. We do not provide a reconciliation of forward-looking non-GAAP financial metrics, because reconciling information is not available without an unreasonable effort, such as attempting to make assumptions that cannot reasonably be made on a forward-looking basis to determine the corresponding GAAP metric.


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flow (Unaudited)

(In thousands, except per share data)

 

 

 

     39 weeks ended  
     January 25, 2025     January 27, 2024  

Cash flows from operating activities:

    

Net loss

   $ (42,632   $ (35,847

Less: Loss from discontinued operations, net of tax

     —        (802
  

 

 

   

 

 

 

Loss from continuing operations

     (42,632     (35,045

Adjustments to reconcile net loss from continuing operations to net cash flows from operating activities from continuing operations:

    

Depreciation and amortization expense

     29,401       30,576  

Amortization of deferred financing costs

     4,248       8,380  

Impairment loss (non-cash)

     1,713       5,798  

Loss on extinguishment of debt

     55,233       —   

Deferred taxes

     (2,344     171  

Stock-based compensation expense

     2,953       2,568  

Non-cash interest expense (paid-in-kind)

     —        1,750  

Changes in operating lease right-of-use assets and liabilities

     19       19,553  

Changes in other long-term assets and liabilities, net

     (6,006     (2,961

Changes in other operating assets and liabilities, net:

    

Receivables

     (250,131     (222,614

Merchandise inventories, net

     17,212       (18,565

Textbook rental inventories

     (8,041     (14,172

Prepaid expenses and other current assets

     1,232       2,436  

Accounts payable and accrued liabilities

     58,616       138,904  
  

 

 

   

 

 

 

Changes in other operating assets and liabilities

     (181,112     (114,011
  

 

 

   

 

 

 

Net cash flows used in operating activities from continuing operations

     (138,527     (83,221

Net cash flows used in operating activities from discontinued operations

     —        (3,650
  

 

 

   

 

 

 

Net cash flow used in operating activities

   $ (138,527   $ (86,871
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

   $ (9,300   $ (11,459

Net change in other noncurrent assets

     792       78  
  

 

 

   

 

 

 

Net cash flows used in investing activities from continuing operations

     (8,508     (11,381

Net cash flows provided by investing activities from discontinued operations

     —        21,395  
  

 

 

   

 

 

 

Net cash flow (used in) provided by investing activities

   $ (8,508   $ 10,014  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from borrowings

   $ 667,355     $ 454,459  

Repayments of borrowings

     (691,121     (384,545

Proceeds from Private Equity Investment

     50,000       —   

Proceeds from Rights Offering

     45,000       —   

Proceeds from sales of Common Stock under ATM facility, net of commissions

     78,450       —   

Payment of equity issuance costs

     (9,724     —   

Payment of deferred financing costs

     (5,569     (9,845

Purchase of treasury shares

     (4     (176

Proceeds from principal stockholder expense reimbursement

     1,190       —   

Payment of finance lease principal

     (385     —   
  

 

 

   

 

 

 

Net cash flows provided by financing activities from continuing operations

     135,192       59,893  

Net cash flows provided by financing activities from discontinued operations

     —        —   
  

 

 

   

 

 

 

Net cash flows provided by financing activities

   $ 135,192     $ 59,893  
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

   $ (11,843   $ (16,964

Cash, cash equivalents and restricted cash at beginning of period

     28,570       31,988  
  

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash at end of period

     16,727       15,024  

Less: Cash, cash equivalents, and restricted cash of discontinued operations at end of period

     —        —   
  

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash of continuing operations at end of period

   $ 16,727     $ 15,024