Carlotz Inc
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Consumer Discretionary : Specialty Retail |
Company profile

CarLotz, Inc., formerly Acamar Partners Acquisition Corp., operates vehicle consignment and retail remarketing business. The Company provides its corporate vehicle sourcing partners and retail sellers of used vehicles with the ability to access the retail sales channel. It operates a technology-enabled buying, sourcing and selling model that offers an omni-channel and selection of vehicles, while allowing for an end-to-end electronic commerce interface that enables buying and selling. The Company's Retail Remarketing technology provides its corporate vehicle sourcing partners with real-time performance metrics and data analytics, along with custom business intelligence reporting that enables price and vehicle triage optimization between the wholesale and retail channel. The Company offers its products and services to corporate vehicle sourcing partners, retail sellers of used vehicles and retail customers seeking to buy used vehicles.

Closing Price
$1.80
Day's Change
-0.13 (-6.74%)
Bid
--
Ask
--
B/A Size
--
Day's High
2.04
Day's Low
1.80
Volume
(Heavy Day)
Volume:
1,687,334

10-day average volume:
1,275,774
1,687,334

Best Buy Reports Better-Than-Expected Third Quarter Results

7:00 am ET November 23, 2021 (BusinessWire) Print

--GAAP Diluted EPS Increased 35% to $2.00

--Non-GAAP Diluted EPS Increased 1% to $2.08

--Raises Full-Year Enterprise Comparable Sales Growth Outlook to a Range of 10.5% to 11.5%

Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week third quarter ended October 30, 2021 ("Q3 FY22"), as compared to the 13-week third quarter ended October 31, 2020 ("Q3 FY21").

                                       
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                        Q3 FY22                                                        Q3 FY21
---------------------------------------------- ------------------------------------------------------------   ------------------------------------------------------------
Revenue ($ in millions)                                   
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  $               11,910                      $               11,853  
  Enterprise
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  $               10,985                      $               10,850  
  Domestic segment
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  $                  925                      $                1,003  
  International segment
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  1.6 %                                      23.0 %
  Enterprise comparable sales % change(1)
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  2.0 %                                      22.6 %
  Domestic comparable sales % change(1)
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                               (10.1) %                                     173.7 %
  Domestic comparable online sales % change(1)
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                (3.0) %                                      27.3 %
  International comparable sales % change(1)
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Operating Income                                          
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  5.6 %                                       4.7 %
  GAAP operating income as a % of revenue
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  5.8 %                                       6.1 %
  Non-GAAP operating income as a % of revenue
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Diluted Earnings per Share ("EPS")                        
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  $                 2.00                      $                 1.48  
  GAAP diluted EPS
---------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

For GAAP to non-GAAP reconciliations of the measures referred to in the above table, please refer to the attached supporting schedule.

"We delivered record Q3 results, including 2% Domestic comparable sales on top of 22.6% last year, as our leaders continued to drive new ways of operating and our employees continued to do amazing things to support our customer's technology needs in knowledgeable, fast and convenient ways," said Corie Barry, Best Buy CEO. "Our omnichannel capabilities and our ability to inspire and support across all of technology in a way no one else can means we are uniquely positioned to seize the opportunity in this environment and in the future."

"More people continue to sustainably work, entertain, cook and connect at home, and while customers are returning to stores, digital sales were still more than double pre-pandemic levels, and phone, chat and in-home sales continued to grow," Barry continued. "During the third quarter, we reached our fastest small-package online shipping times ever as our same-day delivery was up 400% and we nearly doubled the percent of products delivered within one day compared to last year."

"We are looking forward to a strong holiday season and believe we are extremely well-positioned with both the tech customers want and fast and convenient ways to get it," said Matt Bilunas, Best Buy CFO. "We are committed to driving initiatives that will deliver future growth and our Q4 outlook reflects continued investments in our new membership program, technology, advertising and our health strategy."

Financial Outlook

The company is providing the following Enterprise outlook:

Q4 FY22:

Revenue of $16.4 billion to $16.9 billion Comparable sales growth of -2.0% to +1.0% Non-GAAP gross profit rate(2) decline of approximately 30 basis points to last year Non-GAAP SG&A(2) dollar growth of approximately 8% to last year Non-GAAP effective income tax rate(2)of approximately 24.0%

FY22:

Revenue of $51.8 billion to $52.3 billion compared to the prior outlook of $51.0 billion to $52.0 billion Comparable sales growth of 10.5% to 11.5% compared to the prior outlook of 9% to 11% growth Non-GAAP gross profit rate(2) slightly higher than last year, which remains unchanged Non-GAAP SG&A(2) growth of approximately 9.5% compared to the prior outlook of 9% growth Non-GAAP effective income tax rate(2)of approximately 20.0%, which remains unchanged Share repurchases of more than $2.5 billion, which remains unchanged

Domestic Segment Q3 FY22 Results

Domestic Revenue

Domestic revenue of $10.99 billion increased 1.2% versus last year. The increase was primarily driven by comparable sales growth of 2.0%, which was partially offset by the loss of revenue from permanent store closures in the past year.

From a merchandising perspective, the largest drivers of comparable sales growth on a weighted basis were appliances, home theater and mobile phones. These positive drivers were partially offset by a decline in computing.

Domestic online revenue of $3.44 billion decreased 10.1% on a comparable basis, and as a percentage of total Domestic revenue, online revenue decreased to approximately 31.3% versus 35.2% last year.

Domestic Gross Profit Rate

Domestic gross profit rate was 23.4% versus 24.0% last year. The gross profit rate decrease of approximately 60 basis points was primarily due to (1) lower product margin rates, which were driven by lapping low levels of promotions, product damages and returns last year, as well as increased inventory shrink; and (2) lower services margin rates, which included rate pressure associated with the company's new Totaltech membership offering. The previous items were partially offset by higher profit-sharing revenue from the company's private label and co-branded credit card arrangement.

Domestic Selling, General and Administrative Expenses ("SG&A")

Domestic GAAP SG&A was $1.96 billion, or 17.9% of revenue, versus $1.95 billion, or 18.0% of revenue, last year. On a non-GAAP basis, SG&A was $1.94 billion, or 17.6% of revenue, versus $1.93 billion, or 17.8% of revenue, last year. Both GAAP and non-GAAP SG&A increased primarily due to higher advertising expense and increased technology investments, which were partially offset by lapping last year's $40 million donation to the Best Buy Foundation and lower incentive compensation.

International Segment Q3 FY22 Results

International Revenue

International revenue of $925 million decreased 7.8% versus last year. This decrease was primarily driven by the loss of revenue from exiting Mexico and a comparable sales decline of 3.0% in Canada. These items were partially offset by the benefit of approximately 450 basis points of favorable foreign currency exchange rates.

International Gross Profit Rate

International GAAP gross profit rate was 25.0% versus 19.0% last year. On a non-GAAP basis, the gross profit rate was 25.0% versus 22.6% last year. The higher GAAP and non-GAAP gross profit rates were primarily driven by improved product margin rates in Canada, and sales mixing out of Mexico, which had a lower gross profit rate than Canada. The higher GAAP gross profit also included the impact of lapping $36 million of inventory markdowns associated with the company's decision to exit its operations in Mexico last year.

International SG&A

International SG&A was $171 million, or 18.5% of revenue, versus $175 million, or 17.4% of revenue, last year. SG&A decreased primarily due to the company's exit of its Mexico operations, which was partially offset by the impact of foreign exchange rates and increased store payroll expense in Canada.

Dividends and Share Repurchases

In Q3 FY22, the company returned a total of $577 million to shareholders through share repurchases of $405 million and dividends of $172 million. On a year-to-date basis, the company has returned a total of $2.25 billion to shareholders through share repurchases of $1.73 billion and dividends of $522 million.

Today, the company announced its board of directors has authorized the payment of a regular quarterly cash dividend of $0.70 per common share. The quarterly dividend is payable on January 4, 2022, to shareholders of record as of the close of business on December 14, 2021.

Conference Call

Best Buy is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on November 23, 2021. A webcast of the call is expected to be available at www.investors.bestbuy.com, both live and after the call.

Notes:

(1) Comparable sales include revenue from all stores that were temporarily closed or operating an enhanced curbside-only operating model as a result of COVID-19. The method of calculating comparable sales varies across the retail industry, including the treatment of store closures as a result of COVID-19. As a result, our method of calculating comparable sales may not be the same as other retailers' methods. On November 24, 2020, the company announced its decision to exit its operations in Mexico. As a result, all revenue from Mexico operations has been excluded from the comparable sales calculation beginning in fiscal December FY21. For additional information on comparable sales, please see our most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission ("SEC"), and available at www.investors.bestbuy.com.

(2) A reconciliation of the projected non-GAAP gross profit rate, non-GAAP SG&A and non-GAAP effective income tax rate, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measures, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges; price-fixing settlements; goodwill impairments; gains and losses on investments; intangible asset amortization; certain acquisition-related costs; and the tax effect of all such items. Historically, the company has excluded these items from non-GAAP financial measures. The company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, "non-GAAP adjustments"). The decisions and events that typically lead to the recognition of non-GAAP adjustments, such as a decision to exit part of the business or reaching settlement of a legal dispute, are inherently unpredictable as to if or when they may occur. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.

Forward-Looking and Cautionary Statements:

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management's current views and estimates regarding future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as "anticipate," "believe," "assume," "estimate," "expect," "intend," "foresee," "project," "guidance," "plan," "outlook," and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: the duration and scope of the COVID-19 pandemic and its resurgence and the impact on demand for our products and services, levels of consumer confidence and our supply chain; the effects and duration of steps we have taken and will continue to take in response to the pandemic, including the implementation of our interim and evolving operating model; actions governments, businesses and individuals have taken and will continue to take in response to the pandemic and their impact on economic activity and consumer spending; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers), our expansion strategies, our focus on services as a strategic priority, our reliance on key vendors and mobile network carriers, our ability to attract and retain qualified employees, changes in market compensation rates, risks arising from statutory, regulatory and legal developments, macroeconomic pressures in the markets in which we operate, failure to effectively manage our costs, our reliance on our information technology systems, our ability to prevent or effectively respond to a privacy or security breach, our ability to effectively manage strategic ventures, alliances or acquisitions, our dependence on cash flows and net earnings generated during the fourth fiscal quarter, susceptibility of our products to technological advancements, product life cycle preferences and changes in consumer preferences, economic or regulatory developments that might affect our ability to provide attractive promotional financing, interruptions and other supply chain issues, catastrophic events, health crises, pandemics, our ability to maintain positive brand perception and recognition, product safety and quality concerns, changes to labor or employment laws or regulations, our ability to effectively manage our real estate portfolio, constraints in the capital markets or our vendor credit terms, changes in our credit ratings, any material disruption in our relationship with or the services of third-party vendors, risks related to our exclusive brand products and risks associated with vendors that source products outside of the U.S., including trade restrictions or changes in the costs of imports (including existing or new tariffs or duties and changes in the amount of any such tariffs or duties) and risks arising from our international activities.

A further list and description of these risks, uncertainties and other matters can be found in the company's annual report and other reports filed from time to time with the SEC, including, but not limited to, Best Buy's Annual Report on Form 10-K filed with the SEC on March 19, 2021 and its Quarterly Reports on Form 10-Q filed with the SEC. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.

                                                                                                                                                                             BEST BUY CO., INC.
                                                                                                                                                                CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                                                                                                                            ($ and shares in millions, except per share amounts)
                                                                                                                                                                 (Unaudited and subject to reclassification)
                                                           
                                                           
                                                           
                                                                                       Three Months Ended                                                                                                                                           Nine Months Ended
                                   ----------------------------------------------------------------------------------------------------------------------------------------------------------                            --------------------------------------------------------------------------------------------------------------------------------------------
                                              October 30, 2021                                                        October 31, 2020                                                 October 30, 2021                                                 October 31, 2020
                                   --------------------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
Revenue                            $                                                11,910     $                                  11,853     $                                  35,396     $                                  30,325  
Cost of sales                                                     9,108                      9,058                     27,069                     23,295  
                                   ---------------------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Gross profit                                                      2,802                      2,795                      8,327                      7,030  
                                                                   23.5 %                                        23.6 %                                        23.5 %                                        23.2 %
  Gross profit %
Selling, general and administrative expenses                                         2,133                      2,123                      6,130                      5,560  
                                                                   17.9 %                                        17.9 %                                        17.3 %                                        18.3 %
  SG&A %
Restructuring charges                                               (1)                        111                       (39)                        112  
                                   ---------------------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Operating income                                                    670                        561                      2,236                      1,358  
                                                                    5.6 %                                         4.7 %                                         6.3 %                                         4.5 %
 Operating income %
Other income (expense):                                                       
                                                                      1                          5                          7                         19  
    Investment income and other
                                                                    (7)                       (11)                       (19)                       (43)  
    Interest expense
                                                                      -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Earnings before income tax expense and equity in income of affiliates                  664                        555                      2,224                      1,334  
Income tax expense                                                  166                        164                        402                        352  
                                                                   25.1 %                                        29.6 %                                        18.1 %                                        26.4 %
  Effective tax rate
Equity in income of affiliates                                        1                          -                          6                          -  
                                   ---------------------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Net earnings                       $                                                   499     $                                     391     $                                   1,828     $                                     982  
                                   ================================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
                                                           
Basic earnings per share           $                                                  2.02     $                                    1.50     $                                    7.31     $                                    3.79  
Diluted earnings per share         $                                                  2.00     $                                    1.48     $                                    7.23     $                                    3.74  
                                                           
Weighted-average common shares outstanding:                                                                         
                                                                  246.4                      259.8                      249.9                      259.3  
    Basic
                                                                  249.1                      263.7                      252.9                      262.5  
    Diluted
                                                                              BEST BUY CO., INC.
                                                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                ($ in millions)
                                                                  (Unaudited and subject to reclassification)
                                         
                                         
                                                     October 30, 2021                                       October 31, 2020
                                                 ------------------------------------------------------------                        ----------------------------------------
Assets                                                      
Current assets:                                             
                                                 $                                   3,465     $                                   5,136
  Cash and cash equivalents
                                                                      -                        545
  Short-term investments
                                                                  1,016                      1,028
  Receivables, net
                                                                  8,553                      7,459
  Merchandise inventories
                                                                    486                        383
  Other current assets
                                                 -------------------- -------------------- --------------------                      -------------------- --------------------
                                                                 13,520                     14,551
     Total current assets
Property and equipment, net                                       2,256                      2,265
Operating lease assets                                            2,688                      2,692
Goodwill                                                            986                        986
Other assets                                                        652                        708
                                                 -------------------- -------------------- --------------------                      -------------------- --------------------
                                                 $                                  20,102     $                                  21,202
  Total assets
                                                 ==================== ==================== ====================                      ==================== ====================
                                         
Liabilities and equity                                      
Current liabilities:                                        
                                                 $                                   8,405     $                                   9,110
  Accounts payable
                                                                    306                        278
  Unredeemed gift card liabilities
                                                                    977                        788
  Deferred revenue
                                                                    703                        446
  Accrued compensation and related expenses
                                                                    895                        968
  Accrued liabilities
                                                                    645                        685
  Current portion of operating lease liabilities
                                                                     15                        670
  Current portion of long-term debt
                                                 -------------------- -------------------- --------------------                      -------------------- --------------------
                                                                 11,946                     12,945
     Total current liabilities
Long-term operating lease liabilities                             2,102                      2,117
Long-term liabilities                                               553                        798
Long-term debt                                                    1,223                      1,256
Equity                                                            4,278                      4,086
                                                 -------------------- -------------------- --------------------                      -------------------- --------------------
                                                 $                                  20,102     $                                  21,202
  Total liabilities and equity
                                                 ==================== ==================== ====================                      ==================== ====================
                                                                                                         BEST BUY CO., INC.
                                                                                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                           ($ in millions)
                                                                                             (Unaudited and subject to reclassification)
                                                                            
                                                                                                                        Nine Months Ended
                                                                  ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              October 30, 2021                                                         October 31, 2020
                                                                  ----------------------------------------------------------------------------                        ------------------------------------------------------------
Operating activities                                                                           
Net earnings                                                      $                                                   1,828     $                                     982  
Adjustments to reconcile net earnings to total cash provided by operating activities:                                                
                                                                                                     644                        628  
    Depreciation and amortization
                                                                                                    (39)                        112  
    Restructuring charges
                                                                                                     105                        107  
    Stock-based compensation
                                                                                                    (16)                         19  
    Deferred income taxes
                                                                                                       3                         10  
    Other, net
                                                                                                                                     
  Changes in operating assets and liabilities:
                                                                                                      43                        106  
    Receivables
                                                                                                 (2,924)                    (2,300)  
    Merchandise inventories
                                                                                                    (12)                       (60)  
    Other assets
                                                                                                   1,387                      3,824  
    Accounts payable
                                                                                                   (172)                        121  
    Income taxes
                                                                                                     214                        358  
    Other liabilities
                                                                  ---------------------------- ---------------------------- --------------------                      -------------------- -------------------- --------------------
Total cash provided by operating activities                                                        1,061                      3,907  
                                                                            
Investing activities                                                                           
                                                                                                   (548)                      (534)  
    Additions to property and equipment
                                                                                                   (221)                      (620)  
    Purchases of investments
                                                                                                      64                          -  
    Sales of investments
                                                                                                     (2)                          1  
    Other, net
                                                                  ---------------------------- ---------------------------- --------------------                      -------------------- -------------------- --------------------
Total cash used in investing activities                                                            (707)                    (1,153)  
                                                                            
Financing activities                                                                           
                                                                                                 (1,728)                       (62)  
    Repurchase of common stock
                                                                                                      28                         28  
    Issuance of common stock
                                                                                                   (522)                      (426)  
    Dividends paid
                                                                                                       -                      1,892  
    Borrowings of debt
                                                                                                   (123)                    (1,261)  
    Repayments of debt
                                                                                                     (2)                        (1)  
    Other, net
                                                                  ---------------------------- ---------------------------- --------------------                      -------------------- -------------------- --------------------
Total cash provided by (used in) financing activities                                            (2,347)                        170  
                                                                            
Effect of exchange rate changes on cash and cash equivalents                                           6                        (8)  
                                                                  ---------------------------- ---------------------------- --------------------                      -------------------- -------------------- --------------------
Increase (decrease) in cash, cash equivalents and restricted cash                                (1,987)                      2,916  
Cash, cash equivalents and restricted cash at beginning of period                                  5,625                      2,355  
                                                                  ---------------------------- ---------------------------- --------------------                      -------------------- -------------------- --------------------
Cash, cash equivalents and restricted cash at end of period       $                                                   3,638     $                                   5,271  
                                                                  ============================ ============================ ====================                      ==================== ==================== ====================
                                                                                                                                                                         BEST BUY CO., INC.
                                                                                                                                                                         SEGMENT INFORMATION
                                                                                                                                                                           ($ in millions)
                                                                                                                                                             (Unaudited and subject to reclassification)
                                                    
                                                                                       Three Months Ended                                                                                                                                    Nine Months Ended
                                          --------------------------------------------------------------------------------------------------------------------------------------------                            --------------------------------------------------------------------------------------------------------------------------------------------
Domestic Segment Results                                         October 30, 2021                                                 October 31, 2020                                                 October 30, 2021                                                 October 31, 2020
                                          ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
Revenue                                             $                        10,985               $                        10,850               $                        32,837               $                        27,893  
Comparable sales % change                                    2.0 %                                        22.6 %                                        18.3 %                                         7.5 %
Comparable online sales % change                          (10.1) %                                       173.7 %                                      (12.5) %                                       191.4 %
Gross profit                                        $                         2,571               $                         2,604               $                         7,703               $                         6,509  
Gross profit as a % of revenue                              23.4 %                                        24.0 %                                        23.5 %                                        23.3 %
SG&A                                                $                         1,962               $                         1,948               $                         5,647               $                         5,087  
SG&A as a % of revenue                                      17.9 %                                        18.0 %                                        17.2 %                                        18.2 %
Operating income                                    $                           609               $                           612               $                         2,100               $                         1,377  
Operating income as a % of revenue                           5.5 %                                         5.6 %                                         6.4 %                                         4.9 %
                                                    
Domestic Segment Non-GAAP Results(1)                                   
Gross profit                                        $                         2,571               $                         2,604               $                         7,703               $                         6,509  
Gross profit as a % of revenue                              23.4 %                                        24.0 %                                        23.5 %                                        23.3 %
SG&A                                                $                         1,937               $                         1,928               $                         5,582               $                         5,027  
SG&A as a % of revenue                                      17.6 %                                        17.8 %                                        17.0 %                                        18.0 %
Operating income                                    $                           634               $                           676               $                         2,121               $                         1,482  
Operating income as a % of revenue                           5.8 %                                         6.2 %                                         6.5 %                                         5.3 %
                                                    
                                                                                       Three Months Ended                                                                                                                                    Nine Months Ended
                                          --------------------------------------------------------------------------------------------------------------------------------------------                            --------------------------------------------------------------------------------------------------------------------------------------------
International Segment Results                                    October 30, 2021                                                 October 31, 2020                                                 October 30, 2021                                                 October 31, 2020
                                          ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
Revenue                                             $                           925               $                         1,003               $                         2,559               $                         2,432  
Comparable sales % change                                  (3.0) %                                        27.3 %                                         7.7 %                                        15.1 %
Gross profit                                        $                           231               $                           191               $                           624               $                           521  
Gross profit as a % of revenue                              25.0 %                                        19.0 %                                        24.4 %                                        21.4 %
SG&A                                                $                           171               $                           175               $                           483               $                           473  
SG&A as a % of revenue                                      18.5 %                                        17.4 %                                        18.9 %                                        19.4 %
Operating income (loss)                             $                            61               $                          (51)               $                           136               $                          (19)  
Operating income (loss) as a % of revenue                    6.6 %                                       (5.1) %                                         5.3 %                                       (0.8) %
                                                    
International Segment Non-GAAP Results(1)                                                                    
Gross profit                                        $                           231               $                           227               $                           618               $                           557  
Gross profit as a % of revenue                              25.0 %                                        22.6 %                                        24.2 %                                        22.9 %
SG&A                                                $                           171               $                           175               $                           483               $                           473  
SG&A as a % of revenue                                      18.5 %                                        17.4 %                                        18.9 %                                        19.4 %
Operating income                                    $                            60               $                            52               $                           135               $                            84  
Operating income as a % of revenue                           6.5 %                                         5.2 %                                         5.3 %                                         3.5 %
                                                    
(1) For GAAP to non-GAAP reconciliations, please refer to the attached supporting schedule titled Reconciliation of Non-GAAP Financial Measures.
                                                                                                                        BEST BUY CO., INC.
                                                                                                                     REVENUE CATEGORY SUMMARY
                                                                                                            (Unaudited and subject to reclassification)
                              
                                                        Revenue Mix                                                                                             Comparable Sales
                            ----------------------------------------------------------------------------------------------------                          ----------------------------------------------------------------------------------------------------
                                                    Three Months Ended                                                                                         Three Months Ended
                            ----------------------------------------------------------------------------------------------------                          ----------------------------------------------------------------------------------------------------
Domestic Segment                         October 30, 2021                            October 31, 2020                            October 30, 2021                            October 31, 2020
                            ----------------------------------------                       ----------------------------------------                       ----------------------------------------                       ----------------------------------------
Computing and Mobile Phones                   45 %                                        47 %                                     (2.4) %                                      21.5 %
Consumer Electronics                          30 %                                        29 %                                       5.5 %                                      21.1 %
Appliances                                    15 %                                        14 %                                      10.9 %                                      39.3 %
Entertainment                                  5 %                                         5 %                                       4.1 %                                      17.5 %
Services                                       5 %                                         5 %                                     (5.6) %                                      12.7 %
Other                                          - %                                         - %                                       N/A                      N/A  
                            -------------------- --------------------                      -------------------- --------------------
                                             100 %                                       100 %                                       2.0 %                                      22.6 %
   Total
                            ==================== ====================                      ==================== ====================
                              
                                                        Revenue Mix                                                                                             Comparable Sales
                            ----------------------------------------------------------------------------------------------------                          ----------------------------------------------------------------------------------------------------
                                                    Three Months Ended                                                                                         Three Months Ended
                            ----------------------------------------------------------------------------------------------------                          ----------------------------------------------------------------------------------------------------
International Segment                    October 30, 2021                            October 31, 2020                            October 30, 2021                            October 31, 2020
                            ----------------------------------------                       ----------------------------------------                       ----------------------------------------                       ----------------------------------------
Computing and Mobile Phones                   50 %                                        53 %                                     (6.7) %                                      35.7 %
Consumer Electronics                          27 %                                        27 %                                     (0.8) %                                      13.3 %
Appliances                                     9 %                                         9 %                                     (1.8) %                                      40.1 %
Entertainment                                  6 %                                         5 %                                      15.0 %                                      35.6 %
Services                                       6 %                                         5 %                                     (2.2) %                                       4.3 %
Other                                          2 %                                         1 %                                      17.0 %                                      22.0 %
                            -------------------- --------------------                      -------------------- --------------------
                                             100 %                                       100 %                                     (3.0) %                                      27.3 %
   Total
                            ==================== ====================                      ==================== ====================

BEST BUY CO., INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ in millions, except per share amounts) (Unaudited and subject to reclassification)

The following information provides reconciliations of the most comparable financial measures presented in accordance with accounting principles generally accepted in the U.S. (GAAP financial measures) to presented non-GAAP financial measures. The company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP financial measures. Generally, presented non-GAAP financial measures include adjustments for items such as restructuring charges, price-fixing settlements, goodwill impairments, gains and losses on investments, intangible asset amortization, certain acquisition-related costs and the tax effect of all such items. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in this earnings release and the company's financial statements and other publicly filed reports. Non-GAAP financial measures as presented herein may not be comparable to similarly titled measures used by other companies.

                                                                       
                                                                       
                                                                                                                                    Three Months Ended                                                                                                                                                                                                                       Three Months Ended
                                             ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     October 30, 2021                                                                                                                                                                                                                         October 31, 2020
                                             ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Domestic                                                       International                                                    Consolidated                                                       Domestic                                                       International                                                    Consolidated
                                             ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
Gross profit                                                    $                2,571                        $                  231                        $                2,802                        $                2,604                        $                  191                        $                2,795  
% of revenue                                                   23.4 %                                        25.0 %                                        23.5 %                                        24.0 %                                        19.0 %                                        23.6 %
                                                                  -                          -                          -                          -                         36                         36  
    Restructuring - inventory markdowns(1)
                                             -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP gross profit                                           $                2,571                        $                  231                        $                2,802                        $                2,604                        $                  227                        $                2,831  
                                             ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                   23.4 %                                        25.0 %                                        23.5 %                                        24.0 %                                        22.6 %                                        23.9 %
                                                                       
SG&A                                                            $                1,962                        $                  171                        $                2,133                        $                1,948                        $                  175                        $                2,123  
% of revenue                                                   17.9 %                                        18.5 %                                        17.9 %                                        18.0 %                                        17.4 %                                        17.9 %
                                                               (20)                          -                       (20)                       (20)                          -                       (20)  
    Intangible asset amortization(2)
                                                                (5)                          -                        (5)                          -                          -                          -  
    Acquisition-related transaction costs(2)
                                             -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP SG&A                                                   $                1,937                        $                  171                        $                2,108                        $                1,928                        $                  175                        $                2,103  
                                             ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                   17.6 %                                        18.5 %                                        17.7 %                                        17.8 %                                        17.4 %                                        17.7 %
                                                                       
Operating income (loss)                                         $                  609                        $                   61                        $                  670                        $                  612                        $                 (51)                        $                  561  
% of revenue                                                    5.5 %                                         6.6 %                                         5.6 %                                         5.6 %                                       (5.1) %                                         4.7 %
                                                                  -                          -                          -                          -                         36                         36  
    Restructuring - inventory markdowns(1)
                                                                 20                          -                         20                         20                          -                         20  
    Intangible asset amortization(2)
                                                                  5                          -                          5                          -                          -                          -  
    Acquisition-related transaction costs(2)
                                                                  -                        (1)                        (1)                         44                         67                        111  
    Restructuring charges(3)
                                             -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP operating income                                       $                  634                        $                   60                        $                  694                        $                  676                        $                   52                        $                  728  
                                             ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                    5.8 %                                         6.5 %                                         5.8 %                                         6.2 %                                         5.2 %                                         6.1 %
                                                                       
Effective tax rate                                                             25.1 %                                                        29.6 %
                                                                              (0.1) %                                                       (1.5) %
    Intangible asset amortization(2)
                                                                                  - %                                                       (3.2) %
    Restructuring charges(3)
                                                                                                                                                                                                                     -------------------- -------------------- --------------------                                                                                                                                                                                              -------------------- -------------------- --------------------
                                                                      
                                                                      
                                                                                                                                   Three Months Ended                                                                                                                                                                                                                       Three Months Ended
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    October 30, 2021                                                                                                                                                                                                                         October 31, 2020
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Pretax Earnings                                                   Net of Tax(4)                                                      Per Share                                                     Pretax Earnings                                                   Net of Tax(4)                                                      Per Share
                                            ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
GAAP diluted EPS                                            $                                    2.00                     $                                    1.48  
                                            $                                       -     $                                       -                          -     $                                      36     $                                      36                       0.14  
   Restructuring - inventory markdowns(1)
                                                                20                         14                       0.06                         20                         15                       0.06  
   Intangible asset amortization(2)
                                                                 5                          5                       0.02                          -                          -                          -  
   Acquisition-related transaction costs(2)
                                                               (1)                          -                          -                        111                        100                       0.38  
   Restructuring charges(3)
                                                                                                                                                                                                                    -------------------- -------------------- --------------------                                                                                                                                                                                              -------------------- -------------------- --------------------
                                                                      
                                                                      
                                                                                                                                    Nine Months Ended                                                                                                                                                                                                                        Nine Months Ended
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    October 30, 2021                                                                                                                                                                                                                         October 31, 2020
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Domestic                                                       International                                                    Consolidated                                                       Domestic                                                       International                                                    Consolidated
                                            ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
Gross profit                                                   $                7,703                        $                  624                        $                8,327                        $                6,509                        $                  521                        $                7,030  
% of revenue                                                  23.5 %                                        24.4 %                                        23.5 %                                        23.3 %                                        21.4 %                                        23.2 %
                                                                 -                        (6)                        (6)                          -                         36                         36  
   Restructuring - inventory markdowns(1)
                                            -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP gross profit                                          $                7,703                        $                  618                        $                8,321                        $                6,509                        $                  557                        $                7,066  
                                            ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                  23.5 %                                        24.2 %                                        23.5 %                                        23.3 %                                        22.9 %                                        23.3 %
                                                                      
SG&A                                                           $                5,647                        $                  483                        $                6,130                        $                5,087                        $                  473                        $                5,560  
% of revenue                                                  17.2 %                                        18.9 %                                        17.3 %                                        18.2 %                                        19.4 %                                        18.3 %
                                                              (60)                          -                       (60)                       (60)                          -                       (60)  
   Intangible asset amortization(2)
                                                               (5)                          -                        (5)                          -                          -                          -  
   Acquisition-related transaction costs(2)
                                            -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP SG&A                                                  $                5,582                        $                  483                        $                6,065                        $                5,027                        $                  473                        $                5,500  
                                            ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                  17.0 %                                        18.9 %                                        17.1 %                                        18.0 %                                        19.4 %                                        18.1 %
                                                                      
Operating income (loss)                                        $                2,100                        $                  136                        $                2,236                        $                1,377                        $                 (19)                        $                1,358  
% of revenue                                                   6.4 %                                         5.3 %                                         6.3 %                                         4.9 %                                       (0.8) %                                         4.5 %
                                                                 -                        (6)                        (6)                          -                         36                         36  
   Restructuring - inventory markdowns(1)
                                                                60                          -                         60                         60                          -                         60  
   Intangible asset amortization(2)
                                                                 5                          -                          5                          -                          -                          -  
   Acquisition-related transaction costs(2)
Restructuring charges(3)                                      (44)                          5                       (39)                         45                         67                        112  
                                            -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Non-GAAP operating income                                      $                2,121                        $                  135                        $                2,256                        $                1,482                        $                   84                        $                1,566  
                                            ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
% of revenue                                                   6.5 %                                         5.3 %                                         6.4 %                                         5.3 %                                         3.5 %                                         5.2 %
                                                                      
Effective tax rate                                                            18.1 %                                                        26.4 %
                                                                               0.1 %                                                       (1.1) %
   Intangible asset amortization(2)
                                                                             (0.1) %                                                       (0.8) %
   Restructuring charges(3)
                                                                                                                                                                                                                    -------------------- -------------------- --------------------                                                                                                                                                                                              -------------------- -------------------- --------------------
                                                                      
                                                                                                                                    Nine Months Ended                                                                                                                                                                                                                        Nine Months Ended
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    October 30, 2021                                                                                                                                                                                                                         October 31, 2020
                                            ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Pretax Earnings                                                   Net of Tax(4)                                                      Per Share                                                     Pretax Earnings                                                   Net of Tax(4)                                                      Per Share
                                            ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------                        ------------------------------------------------------------
GAAP diluted EPS                                            $                                    7.23                     $                                    3.74  
                                            $                                     (6)     $                                     (6)                     (0.02)     $                                      36     $                                      36                       0.13  
   Restructuring - inventory markdowns(1)
                                                                60                         44                       0.17                         60                         45                       0.17  
   Intangible asset amortization(2)
                                                                 5                          5                       0.02                          -                          -                          -  
   Acquisition-related transaction costs(2)
                                                              (39)                       (27)                     (0.11)                        112                        101                       0.39  
   Restructuring charges(3)
                                                                                                                                                                                                                    -------------------- -------------------- --------------------                                                                                                                                                                                              -------------------- -------------------- --------------------
Non-GAAP diluted EPS                                        $                                    7.29                     $                                    4.43  
                                                                                                                                                                                                                    ==================== ==================== ====================                                                                                                                                                                                              ==================== ==================== ====================
                                                                      
(1) Represents inventory markdown adjustments recorded within cost of sales associated with the decision to exit operations in Mexico.
(2) Represents charges associated with acquisitions, including: (1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and developed technology; and (2) acquisition-related transaction and due diligence costs, primarily comprised of professional fees.
(3) Represents charges and subsequent adjustments related to actions taken in the Domestic segment to better align the company's organizational structure with its strategic focus and the decision to exit operations in Mexico in the International segment.
(4) The non-GAAP adjustments primarily relate to the U.S. and Mexico. As such, the income tax charge is calculated using the statutory tax rate of 24.5% for all U.S. non-GAAP items for all periods presented. There is no income tax charge for Mexico non-GAAP items, as there was no tax benefit recognized on these expenses in the calculation of GAAP income tax expense.

Return on Assets and Non-GAAP Return on Investment

The tables below provide calculations of return on assets ("ROA") (GAAP financial measure) and non-GAAP return on investment ("ROI") (non-GAAP financial measure) for the periods presented. The company believes ROA is the most directly comparable financial measure to ROI. Non-GAAP ROI is defined as non-GAAP adjusted operating income after tax divided by average invested operating assets. All periods presented below apply this methodology consistently. The company believes non-GAAP ROI is a meaningful metric for investors to evaluate capital efficiency because it measures how key assets are deployed by adjusting operating income and total assets for the items noted below. This method of determining non-GAAP ROI may differ from other companies' methods and therefore may not be comparable to those used by other companies.

                                               
Return on Assets ("ROA")                                                   October 30, 2021(1)                                              October 31, 2020(1)
                                                     ------------------------------------------------------------                        ------------------------------------------------------------
Net earnings                                                   $                         2,644               $                         1,727  
Total assets                                                         19,125                     17,571  
                                                     -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
ROA                                                                    13.8 %                                         9.8 %
                                                     ==================== ==================== ====================                      ==================== ==================== ====================
                                               
Non-GAAP Return on Investment ("ROI")                                      October 30, 2021(1)                                              October 31, 2020(1)
                                                     ------------------------------------------------------------                        ------------------------------------------------------------
Numerator                                                         
----------------------------------------------------
Operating income - total operations                            $                         3,269               $                         2,325  
                                                                        148                        227  
   Add: Non-GAAP operating income adjustments(2)
                                                                        108                        112  
   Add: Operating lease interest(3)
                                                                      (864)                      (653)  
   Less: Income taxes(4)
                                                                        775                        754  
   Add: Depreciation
                                                                        661                        665  
   Add: Operating lease amortization(5)
                                                     -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Adjusted operating income after tax                            $                         4,097               $                         3,430  
                                               
Denominator                                                       
----------------------------------------------------
Total assets                                                   $                        19,125               $                        17,571  
                                                                    (3,692)                    (3,164)  
   Less: Excess cash(6)
                                                                      7,090                      7,056  
   Add: Accumulated depreciation and amortization(7)
                                                                   (10,095)                    (8,724)  
   Less: Adjusted current liabilities(8)
                                                     -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Average invested operating assets                              $                        12,428               $                        12,739  
                                               
Non-GAAP ROI                                                           33.0 %                                        26.9 %
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View source version on businesswire.com: https://www.businesswire.com/news/home/20211123005436/en/

SOURCE: Best Buy Co., Inc.

Investor Contact: 
Mollie O'Brien
mollie.obrien@bestbuy.com

Media Contact: 
Carly Charlson
carly.charlson@bestbuy.com
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