EX-99.2 3 exhibit99220241026q225earn.htm EX-99.2 FINANCIAL STATEMENTS AND NON-GAAP TABLES Document
Exhibit 99.2
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
 
13 weeks ended26 weeks ended
October 26,
2024		October 28,
2023		October 26, 2024October 28, 2023
Sales:
Product sales and other$559,674 $569,698 $810,600 $822,348 
Rental income42,448 40,681 54,953 52,192 
Total sales602,122 610,379 865,553 874,540 
Cost of sales (exclusive of depreciation and amortization expense):
Product and other cost of sales 442,092 451,953 651,517 658,967 
Rental cost of sales22,387 22,184 29,187 28,697 
Total cost of sales464,479 474,137 680,704 687,664 
Gross profit137,643 136,242 184,849 186,876 
Selling and administrative expenses72,940 85,961 139,963 163,437 
Depreciation and amortization expense8,530 10,175 21,587 20,428 
Loss on extinguishment of debt (a)
— — 55,233 — 
Restructuring and other charges (a)
(150)4,274 3,468 8,907 
Operating income (loss)56,323 35,832 (35,402)(5,896)
Interest expense, net 5,463 10,664 13,081 18,918 
Income (loss) from continuing operations before income taxes50,860 25,168 (48,483)(24,814)
Income tax expense (benefit)1,125 314 1,261 303 
Income (loss) from continuing operations$49,735 $24,854 $(49,744)$(25,117)
Loss from discontinued operations, net of tax of $0, $0, $0 and $20, respectively$— $(674)$— $(1,091)
Net income (loss)$49,735 $24,180 $(49,744)$(26,208)
Earnings (loss) per Common Stock:
Basic:
Continuing operations$1.87 $9.36 $(2.48)$(9.47)
Discontinued operations$— $(0.25)$— $(0.41)
Total Basic Earnings (Loss) per share$1.87 $9.11 $(2.48)$(9.88)
Weighted average common shares outstanding - Basic26,527 2,655 20,019 2,651 
Diluted:
Continuing operations$1.87 $9.36 $(2.48)$(9.47)
Discontinued operations$— $(0.25)$— $(0.41)
Total Diluted Earnings (Loss) per share$1.87 $9.11 $(2.48)$(9.88)
Weighted average common shares outstanding - Diluted26,542 2,655 20,019 2,651 
(a)     For additional information, see the Notes in the Non-GAAP disclosure information of this Press Release.



13 weeks ended26 weeks ended
October 26,
2024		October 28,
2023		October 26, 2024October 28, 2023
Percentage of sales:
Sales:
Product sales and other93.0 %93.3 %93.7 %94.0 %
Rental income7.0 %6.7 %6.3 %6.0 %
Total sales100.0 %100.0 %100.0 %100.0 %
Cost of sales (exclusive of depreciation and amortization expense):
Product and other cost of sales (a)
79.0 %79.3 %80.4 %80.1 %
Rental cost of sales (a)
52.7 %54.5 %53.1 %55.0 %
Total cost of sales77.1 %77.7 %78.6 %78.6 %
Gross profit22.9 %22.3 %21.4 %21.4 %
Selling and administrative expenses12.1 %14.1 %16.2 %18.7 %
Depreciation and amortization expense1.4 %1.7 %2.5 %2.3 %
Loss on extinguishment of debt
— %— %6.4 %— %
Restructuring and other charges— %0.7 %0.4 %1.0 %
Operating income (loss)9.4 %5.8 %(4.1)%(0.6)%
Interest expense, net0.9 %1.7 %1.5 %2.2 %
Income (loss) from continuing operations before income taxes8.5 %4.1 %(5.6)%(2.8)%
Income tax expense (benefit)0.2 %0.1 %0.1 %— %
Income (loss) from continuing operations8.3 %4.0 %(5.7)%(2.8)%
(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)
October 26, 2024October 28, 2023
ASSETS
Current assets:
Cash and cash equivalents$11,619 $15,008 
Receivables, net275,847 221,805 
Merchandise inventories, net315,469 364,292 
Textbook rental inventories49,672 51,840 
Prepaid expenses and other current assets33,425 63,410 
Total current assets686,032 716,355 
Property and equipment, net44,926 61,403 
Operating lease right-of-use assets210,271 246,531 
Intangible assets, net85,137 104,026 
Other noncurrent assets25,684 16,664 
Total assets$1,052,050 $1,144,979 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$298,952 $385,895 
Accrued liabilities99,670 112,075 
Current operating lease liabilities124,939 126,426 
Total current liabilities523,561 624,396 
Long-term deferred taxes, net2,050 1,936 
Long-term operating lease liabilities129,748 160,185 
Other long-term liabilities14,334 18,625 
Long-term borrowings 177,551 233,873 
Total liabilities847,244 1,039,015 
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, 27,313 and 558 shares, respectively; outstanding, 27,286 and 531 shares, respectively
273 558 
Additional paid-in-capital933,400 747,518 
Accumulated deficit(706,311)(619,564)
Treasury stock, at cost(22,556)(22,548)
Total stockholders' equity204,806 105,964 
Total liabilities and stockholders' equity$1,052,050 $1,144,979 



BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Non-GAAP Information (a)
(In thousands) (Unaudited)
Consolidated Adjusted Earnings (non-GAAP) (a) - Continuing Operations
13 weeks ended26 weeks ended
October 26, 2024October 28, 2023October 26, 2024October 28, 2023
Net income (loss) from continuing operations$49,735 $24,854 $(49,744)$(25,117)
Reconciling items (below)1,105 5,073 59,093 10,663 
Adjusted Earnings (non-GAAP)$50,840 $29,927 $9,349 $(14,454)
Reconciling items
Loss on extinguishment of debt (b)
$— $— $55,233 $— 
Restructuring and other charges (c)
(150)4,274 3,468 8,907 
Stock-based compensation expense (non-cash)
1,255 799 392 1,756 
Reconciling items (d)
$1,105 $5,073 $59,093 $10,663 
Consolidated Adjusted EBITDA (non-GAAP) (a) - Continuing Operations
13 weeks ended26 weeks ended
October 26, 2024October 28, 2023October 26, 2024October 28, 2023
Net income (loss) from continuing operations$49,735 $24,854 $(49,744)$(25,117)
Add:
Depreciation and amortization expense8,530 10,175 21,587 20,428 
Interest expense, net5,463 10,664 13,081 18,918 
Income tax expense (benefit)1,125 314 1,261 303 
Loss on extinguishment of debt (b)
— — 55,233 — 
Restructuring and other charges (c)
(150)4,274 3,468 8,907 
Stock-based compensation expense (non-cash)
1,255 799 392 1,756 
Adjusted EBITDA (Non-GAAP) - Continuing Operations$65,958 $51,080 $45,278 $25,195 
(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 ended26 weeks ended
October 26, 2024October 28, 2023October 26, 2024October 28, 2023
Net cash flows provided by (used in) operating activities$47,410 $72,698 $(96,582)$(47,160)
Less:
Capital expenditures (b)
3,058 3,977 6,528 8,196 
Cash interest paid5,134 7,576 9,866 13,972 
Cash taxes (refund) paid(2,289)43 (2,085)388 
Free Cash Flow (non-GAAP)$41,507 $61,102 $(110,891)$(69,716)
(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 Expenditures13 weeks ended26 weeks ended
October 26, 2024October 28, 2023October 26, 2024October 28, 2023
Physical store capital expenditures$1,386 $1,743 $3,350 $3,948 
Product and system development1,548 1,697 2,708 3,460 
Other124 537 470 788 
Total Capital Expenditures$3,058 $3,977 $6,528 $8,196 





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) adjusted for certain reconciling items that are subtracted from or added to net income (loss). We define Adjusted EBITDA as net income (loss) plus (1) depreciation and amortization; (2) interest expense and (3) income taxes, (4) as adjusted for items that are subtracted from or added to net income (loss). We define Free Cash Flow as Cash Flows from Operating Activities less capital expenditures, cash interest and 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, which includes consolidated financial statements for each of the three years for the period ended April 27, 2024, April 29, 2023, and April 30, 2022 (Fiscal 2024, Fiscal 2023, and Fiscal 2022, respectively). The Company also urges investors to carefully review the financial information included as part of the Company’s Quarterly Report on Form 10-Q for the period ended July 27, 2024, filed with the SEC on September 10, 2024 and the Form 10-Q 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)
26 weeks ended
October 26, 2024October 28, 2023
Cash flows from operating activities:
Net loss$(49,744)$(26,208)
Less: Loss from discontinued operations, net of tax— (1,091)
Loss from continuing operations(49,744)(25,117)
Adjustments to reconcile net loss from continuing operations to net cash flows from operating activities from continuing operations:
Depreciation and amortization expense21,587 20,428 
Amortization of deferred financing costs3,333 4,406 
Loss on extinguishment of debt55,233 — 
Deferred taxes762 97 
Stock-based compensation expense392 1,756 
Non-cash interest expense (paid-in-kind)
— 863 
Changes in operating lease right-of-use assets and liabilities2,538 1,826 
Changes in other long-term assets and liabilities, net1,287 (2,311)
Changes in other operating assets and liabilities, net:
Receivables, net(171,737)(129,293)
Merchandise inventories28,568 (41,313)
Textbook rental inventories(16,680)(21,491)
Prepaid expenses and other current assets4,282 2,756 
Accounts payable and accrued liabilities23,597 140,233 
Changes in other operating assets and liabilities, net(131,970)(49,108)
Net cash flows used in operating activities from continuing operations(96,582)(47,160)
Net cash flows used in operating activities from discontinued operations— (3,939)
Net cash flow used in operating activities$(96,582)$(51,099)
Cash flows from investing activities:
Purchases of property and equipment$(6,528)$(8,196)
Net change in other noncurrent assets792 78 
Net cash flows used in investing activities from continuing operations(5,736)(8,118)
Net cash flows provided by investing activities from discontinued operations— 21,395 
Net cash flow (used in) provided by investing activities$(5,736)$13,277 
Cash flows from financing activities:
Proceeds from borrowings$455,044 $284,698 
Repayments of borrowings(442,461)(233,970)
Proceeds from Private Equity Investment50,000 — 
Proceeds from Rights Offering45,000 — 
Proceeds from sales of Common Stock under ATM facility, net of commissions9,590 — 
Payment of equity issuance costs(9,702)— 
Payment of deferred financing costs(5,569)(9,381)
Purchase of treasury shares(4)(172)


Proceeds from principal stockholder expense reimbursement1,190 — 
Payment of finance lease principal(398)— 
Net cash flows provided by financing activities from continuing operations102,690 41,175 
Net cash flows provided by financing activities from discontinued operations— — 
Net cash flows provided by financing activities$102,690 $41,175 
Net increase in cash, cash equivalents and restricted cash$372 $3,353 
Cash, cash equivalents and restricted cash at beginning of period28,570 31,988 
Cash, cash equivalents, and restricted cash at end of period28,942 35,341 
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$28,942 $35,341