Wolverine Worldwide Raises Full-Year Outlook and Reports Strong First-Quarter Results
84% eCommerce revenue growth leads Q1 performance
“We believe 2021 will be a breakthrough year for the Company, and our first quarter performance was an excellent start,” said
FIRST-QUARTER 2021 REVIEW
-
Reported revenue was
$510.7 million , up 16.3% versus the prior year. On a constant currency basis, revenue was up 14.3% versus the prior year. Owned eCommerce reported revenue grew 83.6% versus the prior year. - Reported gross margin was 43.5%, compared to 41.4% in the prior year. Adjusted gross margin was 44.3%, compared to 41.4% in the prior year.
- Reported operating margin was 11.4%, compared to 3.8% in the prior year. Adjusted operating margin was 10.2%, compared to 6.9% in the prior year.
-
Reported diluted earnings per share were
$0.45 , compared to$0.16 in the prior year. Adjusted diluted earnings per share were$0.40 , and, on a constant currency basis, were$0.40 , compared to$0.28 in the prior year. - Inventory at the end of the quarter was down 20.8% versus the prior year.
-
Cash flow from operating activities generated
$26.3 million in the quarter, or$102.9 million more than in the prior year. -
Total debt at the end of the quarter was
$720.4 million , or$505.7 million less than in the prior year, and total liquidity at the end of the quarter was$1.2 billion .
“The Company drove strong financial results for the first quarter, delivering meaningful revenue growth and gross margin expansion in the face of certain supply chain obstacles that have plagued the industry,” said
FULL-YEAR 2021 OUTLOOK
For the full 2021 fiscal year, the Company now expects revenue in the range of
This outlook assumes no meaningful deterioration of current market conditions related to the COVID-19 pandemic during the remainder of 2021.
NON-GAAP FINANCIAL MEASURES
Measures referred to in this release as “adjusted” financial results are non-GAAP measures that exclude environmental and other related costs net of recoveries, costs related to the COVID-19 pandemic including air freight costs, credit loss expenses, severance expenses and other related costs and reorganization expenses. The Company also presents constant currency information, which is a non-GAAP measure that excludes the impact of fluctuations in foreign currency exchange rates. The Company calculates constant currency basis by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to the Company's current period reported results. The Company believes providing each of these non-GAAP measures provides valuable supplemental information regarding its results of operations, consistent with how the Company evaluates performance.
The Company has provided a reconciliation of each of the above non-GAAP financial measures to the most directly comparable GAAP financial measure. The Company believes these non-GAAP measures provide useful information to both management and investors because they increase the comparability of current period results to prior period results by adjusting for certain items that may not be indicative of core operating results and enable better identification of trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
EARNINGS CALL INFORMATION
The Company will host a conference call today at
ABOUT WOLVERINE WORLDWIDE
Founded in 1883 on the belief in the possibility of opportunity,
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements regarding the Company’s expectations regarding: its outlook for fiscal year 2021 revenue, reported and adjusted earnings per share and owned eCommerce revenue; inventory position; future growth; and future upside opportunities. In addition, words such as “estimates,” “anticipates,” “believes,” “forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,” “outlook,” “is likely,” “expects,” “intends,” “should,” “will,” “confident,” variations of such words, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Risk Factors include, among others: the effects of the COVID-19 pandemic on the Company’s business, operations, financial results and liquidity, including the duration and magnitude of such effects, which will depend on numerous evolving factors that the Company cannot currently accurately predict or assess, including: the duration and scope of the pandemic; the negative impact on global and regional markets, economies and economic activity, including the duration and magnitude of its impact on unemployment rates, consumer discretionary spending and levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on the Company’s distributors, manufacturers, suppliers, joint venture partners, wholesale customers and other counterparties, and how quickly economies and demand for the Company’s products recover after the pandemic subsides; changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending in the markets and regions in which the Company’s products are sold; the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences; the inability to effectively manage inventory levels; increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export; foreign currency exchange rate fluctuations; currency restrictions; supply chain or other capacity constraints, production disruptions, quality issues, price increases or other risks associated with foreign sourcing; the cost and availability of raw materials, inventories, services and labor for contract manufacturers; labor disruptions; changes in relationships with, including the loss of, significant wholesale customers; risks related to the significant investment in, and performance of, the Company’s consumer-direct operations; risks related to expansion into new markets and complementary product categories; the impact of seasonality and unpredictable weather conditions; changes in general economic conditions and/or the credit markets on the Company’s distributors, suppliers and retailers; increases in the Company’s effective tax rates; failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company; the risks of doing business in developing countries, and politically or economically volatile areas; the ability to secure and protect owned intellectual property or use licensed intellectual property; the impact of regulation, regulatory and legal proceedings and legal compliance risks, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health; the potential breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar events; problems affecting the Company’s supply chain or distribution system, including service interruptions at shipping and receiving ports; strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company’s success in integrating acquired businesses, and implementing new initiatives and ventures; the risk of impairment to goodwill and other intangibles; changes in future pension funding requirements and pension expenses; and additional factors discussed in the Company’s reports filed with the
|
||||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
||||||||
(Unaudited) |
||||||||
(In millions, except earnings per share) |
||||||||
|
Quarter Ended |
|||||||
|
|
|
|
|||||
Revenue |
$ |
510.7 |
|
|
$ |
439.3 |
|
|
Cost of goods sold |
288.4 |
|
|
257.5 |
|
|||
Gross profit |
222.3 |
|
|
181.8 |
|
|||
Gross margin |
43.5 |
% |
|
41.4 |
% |
|||
|
|
|
|
|||||
Selling, general and administrative expenses |
174.4 |
|
|
156.1 |
|
|||
Environmental and other related costs, net of recoveries |
(10.2 |
) |
|
8.8 |
|
|||
Operating expenses |
164.2 |
|
|
164.9 |
|
|||
Operating expenses as a % of revenue |
32.2 |
% |
|
37.5 |
% |
|||
|
|
|
|
|||||
Operating profit |
58.1 |
|
|
16.9 |
|
|||
Operating margin |
11.4 |
% |
|
3.8 |
% |
|||
|
|
|
|
|||||
Interest expense, net |
9.6 |
|
|
7.8 |
|
|||
Other expense (income), net |
2.8 |
|
|
(0.6 |
) |
|||
Total other expenses |
12.4 |
|
|
7.2 |
|
|||
Earnings before income taxes |
45.7 |
|
|
9.7 |
|
|||
|
|
|
|
|||||
Income tax expense (benefit) |
7.3 |
|
|
(3.1 |
) |
|||
Effective tax rate |
16.0 |
% |
|
(32.3 |
)% |
|||
|
|
|
|
|||||
Net earnings |
38.4 |
|
|
12.8 |
|
|||
|
|
|
|
|||||
Less: net loss attributable to noncontrolling interests |
(0.1 |
) |
|
(0.2 |
) |
|||
Net earnings attributable to |
$ |
38.5 |
|
|
$ |
13.0 |
|
|
Diluted earnings per share |
$ |
0.45 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|||||
Supplemental information: |
|
|
|
|||||
Net earnings used to calculate diluted earnings per share |
$ |
37.8 |
|
|
$ |
12.8 |
|
|
Shares used to calculate diluted earnings per share |
83.2 |
|
|
82.0 |
|
|
||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
(In millions) |
||||||||
|
|
|
|
|||||
ASSETS |
|
|
|
|||||
Cash and cash equivalents |
$ |
364.8 |
|
|
$ |
472.6 |
|
|
Accounts receivables, net |
323.6 |
|
|
323.4 |
|
|||
Inventories, net |
320.9 |
|
|
405.3 |
|
|||
Other current assets |
37.9 |
|
|
50.4 |
|
|||
Total current assets |
1,047.2 |
|
|
1,251.7 |
|
|||
Property, plant and equipment, net |
120.8 |
|
|
138.3 |
|
|||
Lease right-of-use assets |
136.7 |
|
|
158.3 |
|
|||
|
825.0 |
|
|
1,039.2 |
|
|||
Other noncurrent assets |
137.6 |
|
|
166.2 |
|
|||
Total assets |
$ |
2,267.3 |
|
|
$ |
2,753.7 |
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|||||
Accounts payable and other accrued liabilities |
$ |
454.1 |
|
|
$ |
282.3 |
|
|
Lease liabilities |
33.7 |
|
|
34.9 |
|
|||
Current maturities of long-term debt |
10.0 |
|
|
12.5 |
|
|||
Borrowings under revolving credit agreements |
— |
|
|
790.0 |
|
|||
Total current liabilities |
497.8 |
|
|
1,119.7 |
|
|||
Long-term debt |
710.4 |
|
|
423.6 |
|
|||
Lease liabilities, noncurrent |
122.8 |
|
|
145.0 |
|
|||
Other noncurrent liabilities |
311.2 |
|
|
329.5 |
|
|||
Stockholders' equity |
625.1 |
|
|
735.9 |
|
|||
Total liabilities and stockholders' equity |
$ |
2,267.3 |
|
|
$ |
2,753.7 |
|
|
||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
(In millions) |
||||||||
|
Quarter Ended |
|||||||
|
|
|
|
|||||
OPERATING ACTIVITIES: |
|
|
|
|||||
Net earnings |
$ |
38.4 |
|
|
$ |
12.8 |
|
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
|
|
|
|||||
Depreciation and amortization |
7.2 |
|
|
7.8 |
|
|||
Deferred income taxes |
1.0 |
|
|
(12.6 |
) |
|||
Stock-based compensation expense |
10.0 |
|
|
2.7 |
|
|||
Pension and SERP expense |
3.5 |
|
|
2.1 |
|
|||
Environmental and other related costs, net of cash payments and recoveries received |
(0.2 |
) |
|
49.6 |
|
|||
Other |
0.6 |
|
|
5.8 |
|
|||
Changes in operating assets and liabilities |
(34.2 |
) |
|
(144.8 |
) |
|||
Net cash provided by (used in) operating activities |
26.3 |
|
|
(76.6 |
) |
|||
|
|
|
|
|||||
INVESTING ACTIVITIES: |
|
|
|
|||||
Business acquisition, net of cash acquired |
— |
|
|
(5.5 |
) |
|||
Additions to property, plant and equipment |
(2.2 |
) |
|
(3.6 |
) |
|||
Other |
(0.5 |
) |
|
(0.2 |
) |
|||
Net cash used in investing activities |
(2.7 |
) |
|
(9.3 |
) |
|||
|
|
|
|
|||||
FINANCING ACTIVITIES: |
|
|
|
|||||
Payments under revolving credit agreements |
— |
|
|
(108.0 |
) |
|||
Borrowings under revolving credit agreements |
— |
|
|
538.0 |
|
|||
Payments on long-term debt |
(2.5 |
) |
|
(2.5 |
) |
|||
Cash dividends paid |
(8.5 |
) |
|
(9.0 |
) |
|||
Purchase of common stock for treasury |
— |
|
|
(21.0 |
) |
|||
Employee taxes paid under stock-based compensation plans |
(9.2 |
) |
|
(19.7 |
) |
|||
Proceeds from the exercise of stock options |
10.5 |
|
|
1.5 |
|
|||
Contributions from noncontrolling interests |
4.8 |
|
|
— |
|
|||
Net cash provided by (used in) financing activities |
(4.9 |
) |
|
379.3 |
|
|||
|
|
|
|
|||||
Effect of foreign exchange rate changes |
(1.3 |
) |
|
(1.4 |
) |
|||
Increase in cash and cash equivalents |
17.4 |
|
|
292.0 |
|
|||
|
|
|
|
|||||
Cash and cash equivalents at beginning of the year |
347.4 |
|
|
180.6 |
|
|||
Cash and cash equivalents at end of the quarter |
$ |
364.8 |
|
|
$ |
472.6 |
|
The following tables contain information regarding the non-GAAP financial measures used by the Company in the presentation of its financial results:
|
||||||||||||||||||||||
Q1 2021 RECONCILIATION TABLES |
||||||||||||||||||||||
RECONCILIATION OF REPORTED REVENUE TO ADJUSTED REVENUE ON A CONSTANT CURRENCY BASIS* |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
(In millions) |
||||||||||||||||||||||
|
GAAP Basis
|
|
Foreign
|
|
Constant
|
|
GAAP Basis
|
|
Constant
|
|
Reported
|
|||||||||||
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
$ |
297.7 |
|
|
$ |
(4.7) |
|
|
$ |
293.0 |
|
|
$ |
247.8 |
|
|
18.2 |
% |
|
20.1 |
% |
|
|
200.9 |
|
|
(3.9) |
|
|
197.0 |
|
|
182.1 |
|
|
8.2 |
|
|
10.3 |
|
|||||
Other |
12.1 |
|
|
— |
|
|
12.1 |
|
|
9.4 |
|
|
28.7 |
|
|
28.7 |
|
|||||
Total |
$ |
510.7 |
|
|
$ |
(8.6) |
|
|
$ |
502.1 |
|
|
$ |
439.3 |
|
|
14.3 |
% |
|
16.3 |
% |
RECONCILIATION OF REPORTED GROSS MARGIN TO ADJUSTED GROSS MARGIN* |
||||||||||||
(Unaudited) |
||||||||||||
(In millions) |
||||||||||||
|
GAAP Basis |
|
Adjustments (1) |
|
As Adjusted |
|||||||
|
|
|
|
|
|
|||||||
Gross Profit - Fiscal 2021 Q1 |
$ |
222.3 |
|
|
$ |
4.0 |
|
|
$ |
226.3 |
|
|
|
|
|
|
|
|
|||||||
Gross margin |
43.5 |
% |
|
|
|
44.3 |
% |
|||||
|
|
|
|
|
|
|||||||
Gross Profit - Fiscal 2020 Q1 |
$ |
181.8 |
|
|
$ |
— |
|
|
$ |
181.8 |
|
|
|
|
|
|
|
|
|||||||
Gross margin |
41.4 |
% |
|
|
|
41.4 |
% |
|||||
|
(1) |
Q1 2021 adjustments reflect |
RECONCILIATION OF REPORTED OPERATING MARGIN TO ADJUSTED OPERATING MARGIN* |
||||||||||||
(Unaudited) |
||||||||||||
(In millions) |
||||||||||||
|
GAAP Basis |
|
Adjustments (1) |
|
As Adjusted |
|||||||
|
|
|
|
|
|
|||||||
Operating Profit - Fiscal 2021 Q1 |
$ |
58.1 |
|
|
$ |
(6.2) |
|
|
$ |
51.9 |
|
|
|
|
|
|
|
|
|||||||
Operating margin |
11.4 |
% |
|
|
|
10.2 |
% |
|||||
|
|
|
|
|
|
|||||||
Operating Profit - Fiscal 2020 Q1 |
$ |
16.9 |
|
|
$ |
13.4 |
|
|
$ |
30.3 |
|
|
|
|
|
|
|
|
|||||||
Operating margin |
3.8 |
% |
|
|
|
6.9 |
% |
|||||
|
(1) |
Q1 2021 adjustments reflect |
RECONCILIATION OF REPORTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES* |
||||||||||||
(Unaudited) |
||||||||||||
(In millions) |
||||||||||||
|
GAAP Basis |
|
Adjustment (1) |
|
As Adjusted |
|||||||
|
|
|
|
|
|
|||||||
Selling, general and administrative expenses - Fiscal 2021 Q1 |
$ |
164.2 |
|
|
$ |
10.2 |
|
|
$ |
174.4 |
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative expenses - Fiscal 2020 Q1 |
$ |
164.9 |
|
|
$ |
(13.4) |
|
|
$ |
151.5 |
|
|
|
(1) |
Q1 2021 adjustments reflect |
RECONCILIATION OF REPORTED DILUTED EPS TO ADJUSTED DILUTED EPS ON A CONSTANT CURRENCY BASIS* |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
|
GAAP Basis |
|
Adjustments (1) |
|
As Adjusted |
|
Foreign
|
|
As Adjusted
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS - Fiscal 2021 Q1 |
$ |
0.45 |
|
|
$ |
(0.05) |
|
|
$ |
0.40 |
|
|
$ |
— |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS - Fiscal 2020 Q1 |
$ |
0.16 |
|
|
$ |
0.12 |
|
|
$ |
0.28 |
|
|
|
|
|
||||
|
(1) |
Q1 2021 adjustments reflect air freight charges related to production and shipping delays caused by the COVID-19 pandemic and environmental and other related costs net of recoveries. Q1 2020 adjustments reflect environmental and other related costs, costs related to the COVID-19 pandemic, including reorganization and credit loss expenses. |
2021 GUIDANCE RECONCILIATION TABLES |
||||||||
RECONCILIATION OF REPORTED DILUTED EPS GUIDANCE TO ADJUSTED DILUTED EPS GUIDANCE AND SUPPLEMENTAL INFORMATION* |
||||||||
(Unaudited) |
||||||||
(In millions, except earnings per share) |
||||||||
|
GAAP Basis |
|
Adjustments (1) |
|
As Adjusted |
|||
|
|
|
|
|
|
|||
EPS - Fiscal 2021 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|||
Supplemental information: |
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Net Earnings - Fiscal 2021 |
|
|
$ |
21.0 |
|
|
|
|
|
|
|
|
|
|
|||
Net Earnings used to calculate diluted earnings per share |
|
|
$ |
21.0 |
|
|
|
|
|
|
|
|
|
|
|||
Shares used to calculate diluted earnings per share |
83.7 |
|
|
|
83.7 |
|||
|
(1) |
2021 adjustments reflect estimated environmental and other related costs net of recoveries and certain other costs including air freight charges related to production and shipping delays caused by the COVID-19 pandemic. |
* |
To supplement the consolidated condensed financial statements presented in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company describes what certain financial measures would have been if, environmental and other related costs net of recoveries, costs related to the COVID-19 pandemic including air freight costs, credit loss expenses, severance expenses, and other related costs and reorganization expenses were excluded. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior period by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. |
|
|
|
|
|
The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding results of operations, consistent with how the Company evaluates performance. The Company calculates constant currency by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to the Company's current period reported results. |
|
|
|
|
|
Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitution for, financial information prepared in accordance with GAAP. A reconciliation of all non-GAAP measures included in this press release, to the most directly comparable GAAP measures are found in the financial tables above. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210512005258/en/
(616) 866-5728
Source: