Best Buy Earnings 2019-11-02

BBY 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
NFLX	163,785	30,171	24,066	17,630	6,608	1,151	2,017	176,666	37%	87.6	4%
CBS	18,582	23,835	19,082	16,167	0	4,167	5,029	27,603	0%	5.5	17%
FAST	18,506	3,756	1,253	5,189	2,470	765	1,217	18,831	48%	15.5	20%
BBY	18,191	14,978	11,693	43,069	10,059	1,515	2,629	18,082	23%	6.9	10%
YUMC	17,921	6,725	3,646	8,646	0	700	1,356	16,625	0%	12.3	10%
CONN	851	2,146	1,509	1,561	415	84	206	1,731	27%	8.4	4%
CIDM	52	98	140	50	0	-18	5	93	0%	18.1	-18%
TWMC	0	150	102	376	115	-80	-77	-10	31%	0.1	-53%
IQ		44,760	26,604	0	0	0	0	-6,760			0%

bby-20191102x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2019


	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-9595

Image - Image1.jpeg

BEST BUY CO., INC.

(Exact name of registrant as specified in its charter)


Minnesota		41-0907483
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7601 Penn Avenue South
Richfield, Minnesota		55423
(Address of principal executive offices)		(Zip Code)

(612) 291-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, $0.10 par value per share	BBY	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer 	Accelerated Filer 		Non-accelerated Filer 

Smaller Reporting Company 		Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 

The registrant had 258,777,447 shares of common stock outstanding as of December 4, 2019.

Table of Contents

BEST BUY CO., INC.

FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 2, 2019

TABLE OF CONTENTS


Part I — Financial Information			3
Item 1.		Financial Statements	3
	a)	Condensed Consolidated Balance Sheets as of November 2, 2019, February 2, 2019, and November 3, 2018	3
	b)	Condensed Consolidated Statements of Earnings for the three and nine months ended November 2, 2019, and November 3, 2018	4
	c)	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended November 2, 2019, and November 3, 2018	5
	d)	Condensed Consolidated Statements of Cash Flows for the nine months ended November 2, 2019, and November 3, 2018	6
	e)	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended November 2, 2019, and November 3, 2018	7
	f)	Notes to Condensed Consolidated Financial Statements	8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.		Controls and Procedures	33
Part II — Other Information			33
Item 1.		Legal Proceedings	33
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.		Exhibits	34
Signatures			35

‎

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

$ in millions, except per share amounts (unaudited)


	November 2, 2019		February 2, 2019		November 3, 2018
Assets
Current assets
Cash and cash equivalents	$	1,205	$	1,980	$	1,228
Short-term investments		-		-		76
Receivables, net		1,056		1,015		921
Merchandise inventories		7,569		5,409		8,168
Other current assets		345		466		508
Total current assets		10,175		8,870		10,901
Property and equipment, net		2,359		2,510		2,525
Operating lease assets		2,751		-		-
Goodwill		982		915		921
Other assets		659		606		653
Total assets	$	16,926	$	12,901	$	15,000

Liabilities and equity
Current liabilities
Accounts payable	$	7,232	$	5,257	$	7,964
Unredeemed gift card liabilities		271		290		281
Deferred revenue		445		446		449
Accrued compensation and related expenses		351		482		349
Accrued liabilities		769		982		844
Current portion of operating lease liabilities		644		-		-
Current portion of long-term debt		14		56		46
Total current liabilities		9,726		7,513		9,933
Long-term liabilities		636		750		775
Long-term operating lease liabilities		2,200		-		-
Long-term debt		1,239		1,332		1,280
Contingencies (Note 14)
Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none		-		-		-
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 260 million, 266 million, and 272 million shares, respectively		26		27		27
Retained earnings		2,809		2,985		2,685
Accumulated other comprehensive income		290		294		300
Total equity		3,125		3,306		3,012
Total liabilities and equity	$	16,926	$	12,901	$	15,000

NOTE: The Consolidated Balance Sheet as of February 2, 2019, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements.

‎

Table of Contents

Condensed Consolidated Statements of Earnings

$ and shares in millions, except per share amounts (unaudited)



	Three Months Ended					Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Revenue	$	9,764	$	9,590	$	28,442	$	28,078
Cost of goods sold		7,403		7,266		21,629		21,400
Gross profit		2,361		2,324		6,813		6,678
Selling, general and administrative expenses		1,973		2,002		5,730		5,709
Restructuring charges		(7)		-		41		47
Operating income		395		322		1,042		922
Other income (expense):
Gain on sale of investments		1		12		1		12
Investment income and other		9		11		33		35
Interest expense		(16)		(15)		(50)		(53)
Earnings before income tax expense		389		330		1,026		916
Income tax expense		96		53		230		187
Net earnings	$	293	$	277	$	796	$	729

Basic earnings per share	$	1.11	$	1.01	$	2.99	$	2.62
Diluted earnings per share	$	1.10	$	0.99	$	2.96	$	2.57

Weighted-average common shares outstanding
Basic		263.2		274.3		266.0		278.6
Diluted		265.2		279.3		269.1		283.8

See Notes to Condensed Consolidated Financial Statements.

‎

Table of Contents

Condensed Consolidated Statements of Comprehensive Income

$ in millions (unaudited)



	Three Months Ended				Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net earnings	$	293	$	277	$	796	$	729
Foreign currency translation adjustments		(4)		4		(4)		(14)
Comprehensive income	$	289	$	281	$	792	$	715

See Notes to Condensed Consolidated Financial Statements.

‎

Table of Contents

Condensed Consolidated Statements of Cash Flows

$ in millions (unaudited)


	Nine Months Ended
	November 2, 2019		November 3, 2018
Operating activities
Net earnings	$	796	$	729
Adjustments to reconcile net earnings to total cash provided by operating activities:
Depreciation and amortization		607		550
Restructuring charges		41		47
Stock-based compensation		109		92
Deferred income taxes		20		15
Other, net		16		(10)
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Receivables		(36)		121
Merchandise inventories		(2,159)		(2,950)
Other assets		(2)		(45)
Accounts payable		1,984		3,085
Other liabilities		(292)		(400)
Income taxes		(147)		(127)
Total cash provided by operating activities		937		1,107

Investing activities
Additions to property and equipment		(586)		(619)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	271	$18,191

10-Q	2019-12-06	Quarter: 2019-11-02
10-Q	2019-09-06	Quarter: 2019-08-03
10-Q	2019-06-07	Quarter: 2019-05-04
10-K	2019-03-28	Annual: 2019-02-02
10-Q	2018-12-07	Quarter: 2018-11-03
10-Q	2018-09-10	Quarter: 2018-08-04
10-Q	2018-06-08	Quarter: 2018-05-05
10-K	2018-04-02	Annual: 2018-02-03
10-Q	2017-12-01	Quarter: 2017-10-28
10-Q	2017-09-05	Quarter: 2017-07-29
10-Q	2017-06-05	Quarter: 2017-04-29
10-K	2017-03-24	Annual: 2017-01-28
10-Q	2016-12-02	Quarter: 2016-10-29
10-Q	2016-09-02	Quarter: 2016-07-30
10-Q	2016-06-09	Quarter: 2016-04-30
10-K	2016-03-23	Annual: 2016-01-30
10-Q	2015-12-04	Quarter: 2015-10-31
10-Q	2015-09-04	Quarter: 2015-08-01
10-Q	2015-06-08	Quarter: 2015-05-02
10-K	2015-03-31	Annual: 2015-01-31
10-Q	2014-12-05	Quarter: 2014-11-01
10-Q	2014-09-10	Quarter: 2014-08-02
10-Q	2014-06-09	Quarter: 2014-05-03
10-K	2014-03-28	Annual: 2014-02-01
10-Q	2013-09-09	Quarter: 2013-08-03
10-Q	2013-06-07	Quarter: 2013-05-04
10-Q	2012-12-05	Quarter: 2012-11-03
10-Q	2012-09-06	Quarter: 2012-08-04
10-Q	2012-06-13	Quarter: 2012-05-05
10-K	2012-05-01	Annual: 2012-03-03
10-Q	2012-01-03	Quarter: 2011-11-26
10-Q	2011-09-30	Quarter: 2011-08-27
10-Q	2011-07-01	Quarter: 2011-05-28
10-K	2011-04-25	Annual: 2011-02-26
10-Q	2011-01-05	Quarter: 2010-11-27
10-Q	2010-10-07	Quarter: 2010-08-28
10-Q	2010-07-08	Quarter: 2010-05-29
10-K	2010-04-28	Annual: 2010-02-27
10-Q	2010-01-07	Quarter: 2009-11-28

8-K	2019-12-12	Officers, Exhibits
8-K	2019-11-26	Earnings, Exhibits
8-K	2019-09-25	Regulation FD, Exhibits
8-K	2019-08-03	Earnings, Exhibits
8-K	2019-07-24	Officers, Exhibits
8-K	2019-06-14	Shareholder Vote
8-K	2019-05-23	Earnings, Exhibits
8-K	2019-04-13	Officers, Exhibits
8-K	2019-04-08	Officers
8-K	2019-02-27	Earnings, Exhibits
8-K	2018-12-14	Officers, Regulation FD, Exhibits
8-K	2018-11-20	Earnings, Exhibits
8-K	2018-09-28	Officers, Regulation FD, Exhibits
8-K	2018-09-27	Other Events, Exhibits
8-K	2018-08-28	Earnings, Exhibits
8-K	2018-08-15	Regulation FD, Other Events, Exhibits
8-K	2018-07-25	Officers
8-K	2018-06-12	Amend Bylaw, Shareholder Vote, Exhibits
8-K	2018-05-24	Earnings, Exhibits
8-K	2018-04-20	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2018-03-22	Officers, Regulation FD, Exhibits
8-K	2018-03-06	Other Events
8-K	2018-03-01	Earnings, Exhibits
8-K	2018-02-28	Exit Costs

EX-31.1	bby-20191102xex31_1.htm
EX-31.2	bby-20191102xex31_2.htm
EX-32.1	bby-20191102xex32_1.htm
EX-32.2	bby-20191102xex32_2.htm