Bluestem Group has ‘solid’ Q4, ends 2015 with $118 million of liquidity

By Lisa Kerner

Charlotte, N.C., April 1 – Bluestem Group Inc. had a “solid” fourth quarter with record sales and profit for Bluestem Brands, Inc., according to president and chief executive officer Steve Nave.

The company also made “significant” progress on the integration of the Orchard Brands Corp. acquisition.

Nave made his comments during the company’s earnings call on Friday to discuss financial results for the fourth quarter and fiscal year ended Jan. 29.

Bluestem Group’s fourth-quarter and fiscal 2015 consolidated results include Bluestem Brands beginning Nov. 7, 2014 and Orchard Brands beginning July 10, 2015.

Adjusted EBITDA for the fourth quarter was $80.6 million, compared with $63.4 million in the fourth quarter of fiscal 2014. Full-year adjusted EBITDA was $137.4 million, compared with $89.8 million for the prior year.

Bluestem Brands had net retail sales of about $738 million for the quarter. Fingerhut sales were up 3.2%, Gettington sales increased 1.9%, and Paycheck Direct sales rose 132.1% year over year, according to the earnings presentation.

Debt and liquidity

“We ended 2015 with $118 million in available liquidity, $500 million outstanding on our term debt and $21 million in borrowings on our inventory line of credit,” executive vice president and chief financial officer Mark Wagener said on the call. “We believe the balance sheet is well positioned for 2016 and beyond.”

Bluestem had a leverage ratio of 3.3 times at quarter’s end.

The company had net commercial assets of $64.9 million at quarter’s end and expects to liquidate these assets over the next 18 months, according to Wagener.

When asked about the uses of cash, management said the company will consider share repurchases, debt reduction and possibly M&A opportunities to fill the gaps in Bluestem’s strategic plan.

The company’s board of directors authorized the repurchase of up to 4.5 million shares of its outstanding common stock in one or more transactions occurring on or prior to March 28, 2017.

Based in Eden Prairie, Minn., Bluestem Group is a holding company. Its businesses include Bluestem Brands, a multi-brand, online retailer of name-brand and private label general merchandise serving low- to middle-income consumers through 16 retail brands.

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