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8-K - FORM 8-K - WOLVERINE WORLD WIDE INC /DE/ | c06606e8vk.htm |
Exhibit 99.1
Wolverine World Wide, Inc. 9341 Courtland Drive Rockford, MI 49351 Phone (616)866-5500; Fax (616)866-0257 |
FOR IMMEDIATE RELEASE
CONTACT: Don Grimes
(616) 863-4404
CONTACT: Don Grimes
(616) 863-4404
WOLVERINE WORLD WIDE, INC. ANNOUNCES RECORD
PERFORMANCE FOR THIRD QUARTER 2010; RAISES
FULL-YEAR EARNINGS GUIDANCE
PERFORMANCE FOR THIRD QUARTER 2010; RAISES
FULL-YEAR EARNINGS GUIDANCE
Rockford, Michigan, October 5, 2010 Wolverine World Wide, Inc. today reported record sales
and earnings per share for the third quarter of 2010. The Company has now delivered record
earnings per share for three consecutive quarters.
Revenue totaled a record $320.4 million in the quarter ended September 11, 2010, an increase
of 11.7% versus the prior year. A slightly stronger U.S. dollar in the quarter reduced revenue
growth by 1.1%.
Diluted earnings per share increased 12.9% to a record $0.70 per share, compared to 2009
adjusted earnings of $0.62 per share. The prior years adjusted earnings exclude the impact of
restructuring charges and other expenses related to the Companys strategic restructuring plan that
was completed in the second quarter of 2010. Reported earnings for the third quarter 2009 were
$0.54 per share.
The momentum in our business continues to build, and we are pleased to report excellent
results for the third quarter, with record performance in both revenue and earnings per share,
stated Blake W. Krueger, the Companys Chairman and Chief Executive Officer. Our standout
financial performance was broad-based, with all of our branded business units, including the
consumer direct and leathers divisions, contributing to the strong revenue increase. Additionally,
the Outdoor Group, Heritage Brands Group and Wolverine Footwear Group all delivered strong
double-digit increases in operating profit. The actions we took last year to position the Company
for accelerated growth coming out of a recessionary environment are having the intended beneficial
impact.
more
Q3 2010 | page 2 |
Don Grimes, the Companys Chief Financial Officer, commented, The Companys proven
multi-brand, multi-geography and multi-distribution channel business model remains one of our key
competitive advantages. The quarters excellent financial performance underscores both the
strength of our business model and the Companys continued focus on delivering solid returns to our
shareholders.
Highlights for the quarter:
| Gross margin in the quarter was 40.1%, essentially flat compared to the prior
years gross margin of 40.2%, adjusted for restructuring and related charges.
Selected selling price increases and a positive shift in channel and geographic mix
helped offset the impact of modestly higher product and freight costs. Reported
gross margin for third quarter 2009 was 39.7%. |
||
| Operating expenses in the quarter were $80.7 million, up 9.0% versus the prior
year, excluding restructuring and related charges. The increase in operating
expenses was driven by planned investments in key strategic growth initiatives and
included a 24% increase in marketing spend across the portfolio. These important
investments were partially offset by continued discipline in general and
administrative expenses, which were down 5.3% versus the prior year. Reported
operating expenses for third quarter 2009 were $77.8 million. |
||
| Accounts receivable at the end of the quarter were up 6.7%, well below the
quarters 11.7% revenue increase. Days sales outstanding at quarter end decreased
notably versus the prior year, to 58.3. Consolidated inventory at the end of the
quarter was up $24.6 million, or 13.3%, compared to the prior year. After four
consecutive quarters of year-over-year inventory decreases, this quarters
inventory increase reflects strong year-to-date revenue growth and the excellent
prospects for the business going forward. |
||
| The Company repurchased 158,700 of its own shares in the quarter for an
aggregate cost of $4.0 million. The Company continues to maintain a solid balance
sheet, with no significant debt and $95.3 million of cash and cash equivalents at
the end of the third quarter. |
more
Q3 2010 | page 3 |
Based on the strength of the financial performance during the first three quarters of the
year, the Company is adjusting its full-year revenue guidance to a range of $1.200 to $1.220
billion, representing growth of 9.0% to 10.8% versus the prior year. The Company is also
increasing its full-year earnings outlook to a range of $2.04 to $2.08 per share, excluding
restructuring and related charges of $0.06 per share. This range represents growth of 15.3% to
17.5% versus the prior years adjusted diluted earnings per share of $1.77. Reported earnings per
diluted share are anticipated in the range of $1.98 to $2.02 compared to prior year reported
earnings per share of $1.24.
Krueger concluded, We are very optimistic about the future, as the first three quarters of
2010 have signaled a return to accelerated growth for our Company. While the consumer recovery is
not as robust or as steady as many predicted, we continue to be encouraged by the eagerness with
which both our retail partners and consumers are embracing our global lifestyle brands. Our order
backlog is exceptionally strong, and we remain focused on delivering innovation and performance in
everything we do.
The Company will host a conference call at 8:30 a.m. EDT today to discuss these results and
current business trends. To listen to the call at the Companys website, go to
www.wolverineworldwide.com, click on Investors in the navigation bar, and then click on
Webcast from the top navigation bar of the Investors page. To listen to the webcast, your
computer must have Windows Media Player, which can be downloaded for free at
www.wolverineworldwide.com. In addition, the conference call can be heard at www.streetevents.com.
A replay of the call will be available at the Companys website through October 19, 2010.
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the
worlds leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform
footwear and apparel. The Companys portfolio of highly recognized brands includes:
Bates®,
Chaco®,
Cushe, Hush Puppies®,
HYTEST®,
Merrell®,
Sebago®
Soft Style® and
Wolverine®.
The Company also is the exclusive footwear licensee of the well-known
brands CAT®,
Harley-Davidson® and Patagonia®. The
Companys products are carried by leading retailers in the U.S. and globally in 180 countries and
territories. For additional information, please visit our website, www.wolverineworldwide.com.
more
Q3 2010 | page 4 |
This press release contains forward-looking statements. In addition, words such as
estimates, anticipates, expects, intends, should, will, 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. Therefore, actual results and outcomes may materially differ from what may be expressed
or forecasted in such forward-looking statements. Current uncertainty in global economic
conditions makes it particularly difficult to predict product demand and other related matters and
makes it more likely that the Companys actual results could differ materially from expectations.
Risk Factors include, among others: the Companys ability to successfully develop brands and
businesses; changes in duty structures in countries of import and export including anti-dumping
measures in Europe and other countries; trade defense actions by countries; the Companys ability
to implement and recognize benefits from tax planning strategies; changes in consumer preferences
or spending patterns; cancellation of orders for future delivery; changes in planned customer
demand, re-orders or at-once orders; the availability and pricing of foreign footwear factory
capacity; reliance on foreign sourcing; regulatory or other changes affecting the supply of
materials used in manufacturing; the availability of power, labor and resources in key foreign
sourcing countries, including China; the impact of competition and pricing; the impact of changes
in the value of foreign currencies and the relative value to the U.S. Dollar; the development of
new initiatives; the development of apparel; retail buying patterns; consolidation in the retail
sector; changes in economic and market conditions; acts and effects of international conflict and
terrorism; weather; and additional factors discussed in the Companys reports filed with the
Securities and Exchange Commission and exhibits thereto. Other Risk Factors exist, and new Risk
Factors emerge from time to time that may cause actual results to differ materially from those
contained in any forward-looking statements. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements as a prediction of actual results.
Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking
statements.
# # #
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($000s, except per share data)
(Unaudited)
($000s, except per share data)
12 Weeks Ended | 36 Weeks Ended | |||||||||||||||
September 11, | September 12, | September 11, | September 12, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue |
$ | 320,396 | $ | 286,764 | $ | 863,492 | $ | 788,526 | ||||||||
Cost of products sold |
191,825 | 171,498 | 512,245 | 474,939 | ||||||||||||
Restructuring and related costs |
| 1,301 | 1,406 | 4,639 | ||||||||||||
Gross profit |
128,571 | 113,965 | 349,841 | 308,948 | ||||||||||||
Gross margin |
40.1 | % | 39.7 | % | 40.5 | % | 39.2 | % | ||||||||
Selling, general and administrative expenses |
80,670 | 74,015 | 235,930 | 222,158 | ||||||||||||
Restructuring and related costs |
| 3,787 | 2,828 | 22,826 | ||||||||||||
Operating expenses |
80,670 | 77,802 | 238,758 | 244,984 | ||||||||||||
Operating profit |
47,901 | 36,163 | 111,083 | 63,964 | ||||||||||||
Operating margin |
15.0 | % | 12.6 | % | 12.9 | % | 8.1 | % | ||||||||
Interest expense, net |
56 | 15 | 141 | 223 | ||||||||||||
Other (income) expense, net |
(244 | ) | (333 | ) | (79 | ) | 79 | |||||||||
(188 | ) | (318 | ) | 62 | 302 | |||||||||||
Earnings before income taxes |
48,089 | 36,481 | 111,021 | 63,662 | ||||||||||||
Income taxes |
13,946 | 9,687 | 32,197 | 18,467 | ||||||||||||
Net earnings |
$ | 34,143 | $ | 26,794 | $ | 78,824 | $ | 45,195 | ||||||||
Diluted earnings per share |
$ | 0.70 | $ | 0.54 | $ | 1.59 | $ | 0.91 | ||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
($000s)
(Unaudited)
($000s)
September 11, | September 12, | |||||||
2010 | 2009 | |||||||
ASSETS: |
||||||||
Cash & cash equivalents |
$ | 95,305 | $ | 78,539 | ||||
Receivables |
238,524 | 223,453 | ||||||
Inventories |
208,534 | 183,983 | ||||||
Other current assets |
19,847 | 24,352 | ||||||
Total current assets |
562,210 | 510,327 | ||||||
Property, plant & equipment, net |
71,501 | 75,741 | ||||||
Other assets |
131,096 | 121,536 | ||||||
Total Assets |
$ | 764,807 | $ | 707,604 | ||||
LIABILITIES & EQUITY: |
||||||||
Current maturities on long-term debt |
$ | 513 | $ | 556 | ||||
Revolving credit agreement |
| 9,900 | ||||||
Accounts payable and other accrued liabilities |
163,638 | 148,398 | ||||||
Total current liabilities |
164,151 | 158,854 | ||||||
Long-term debt |
513 | 1,112 | ||||||
Other non-current liabilities |
91,623 | 75,143 | ||||||
Stockholders equity |
508,520 | 472,495 | ||||||
Total Liabilities & Equity |
$ | 764,807 | $ | 707,604 | ||||
WOLVERINE WORLD WIDE, INC.
REVENUE BY OPERATING GROUP
(Unaudited)
($000s)
REVENUE BY OPERATING GROUP
(Unaudited)
($000s)
12 Weeks Ended | ||||||||||||||||||||||||
September 11, 2010 |
September 12, 2009 |
Change | ||||||||||||||||||||||
Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
Outdoor Group |
$ | 121,293 | 37.9 | % | $ | 114,855 | 40.1 | % | $ | 6,438 | 5.6 | % | ||||||||||||
Wolverine Footwear Group |
65,447 | 20.4 | % | 53,357 | 18.6 | % | 12,090 | 22.7 | % | |||||||||||||||
Heritage Brands Group |
63,456 | 19.8 | % | 55,293 | 19.3 | % | 8,163 | 14.8 | % | |||||||||||||||
Hush Puppies Group |
36,552 | 11.4 | % | 36,411 | 12.7 | % | 141 | 0.4 | % | |||||||||||||||
Other |
3,154 | 1.0 | % | 2,887 | 0.9 | % | 267 | 9.2 | % | |||||||||||||||
Total branded footwear, apparel
and licensing revenue |
289,902 | 90.5 | % | 262,803 | 91.6 | % | 27,099 | 10.3 | % | |||||||||||||||
Other business units |
30,494 | 9.5 | % | 23,961 | 8.4 | % | 6,533 | 27.3 | % | |||||||||||||||
Total Revenue |
$ | 320,396 | 100.0 | % | $ | 286,764 | 100.0 | % | $ | 33,632 | 11.7 | % | ||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($000s)
(Unaudited)
($000s)
36 Weeks Ended | ||||||||
September 11, | September 12, | |||||||
2010 | 2009 | |||||||
OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | 78,824 | $ | 45,195 | ||||
Adjustments necessary to reconcile
net earnings to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
11,869 | 13,011 | ||||||
Deferred income taxes |
(562 | ) | (822 | ) | ||||
Stock-based compensation expense |
6,840 | 6,356 | ||||||
Pension |
11,275 | 10,726 | ||||||
Restructuring and other transition costs |
4,234 | 27,465 | ||||||
Cash payments related to restructuring |
(6,185 | ) | (14,608 | ) | ||||
Other |
7,326 | (11,376 | ) | |||||
Changes in operating assets and liabilities |
(105,959 | ) | (4,874 | ) | ||||
Net cash provided by operating activities |
7,662 | 71,073 | ||||||
INVESTING ACTIVITIES: |
||||||||
Business acquisitions |
| (7,954 | ) | |||||
Additions to property, plant and equipment |
(9,244 | ) | (7,440 | ) | ||||
Other |
(1,552 | ) | (1,876 | ) | ||||
Net cash used in investing activities |
(10,796 | ) | (17,270 | ) | ||||
FINANCING ACTIVITIES: |
||||||||
Net borrowings under revolver |
| (49,600 | ) | |||||
Cash dividends paid |
(16,115 | ) | (16,105 | ) | ||||
Purchase of common stock for treasury |
(52,164 | ) | (6,197 | ) | ||||
Other |
8,800 | 3,871 | ||||||
Net cash used in financing activities |
(59,479 | ) | (68,031 | ) | ||||
Effect of foreign exchange rate changes |
(2,521 | ) | 3,265 | |||||
Decrease in cash and cash equivalents |
(65,134 | ) | (10,963 | ) | ||||
Cash and cash equivalents at beginning of year |
160,439 | 89,502 | ||||||
Cash and cash equivalents at end of year |
$ | 95,305 | $ | 78,539 | ||||
As required by the Securities and Exchange Commission Regulation G, the following tables contain
information regarding the non-GAAP adjustments used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE, INC.
RECONCILIATION OF REPORTED FINANCIAL RESULTS TO ADJUSTED FINANCIAL
RESULTS, EXCLUDING RESTRUCTURING AND RELATED COSTS*
(Unaudited)
($000s, except per share data)
RESULTS, EXCLUDING RESTRUCTURING AND RELATED COSTS*
(Unaudited)
($000s, except per share data)
As Reported | As Adjusted | |||||||||||
12 Weeks Ended | Restructuring and | 12 Weeks Ended | ||||||||||
September 12, 2009 | Related Costs(a) | September 12, 2009 | ||||||||||
Gross profit |
$ | 113,965 | $ | 1,301 | $ | 115,266 | ||||||
Gross margin |
39.7 | % | 40.2 | % | ||||||||
Operating expenses |
$ | 77,802 | $ | (3,787 | ) | $ | 74,015 | |||||
% of revenue |
27.1 | % | 25.8 | % | ||||||||
Diluted earnings per share |
$ | 0.54 | $ | 0.08 | $ | 0.62 |
RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE, EXCLUDING
RESTRUCTURING AND RELATED COSTS*
(Unaudited)
RESTRUCTURING AND RELATED COSTS*
(Unaudited)
Full-Year 2010 | Full-Year 2010 | |||||||||
Guidance | Restructuring and | Guidance | ||||||||
(GAAP Basis) | Related Costs(a) | As Adjusted | ||||||||
Diluted earnings per share |
$1.98 - $2.02 | $ | 0.06 | $ | 2.04 - $2.08 |
(a) | These adjustments present the Companys results of operations and guidance on a continuing
basis without the effects of fluctuations in restructuring and related costs. The adjusted
financial results and guidance are used by management to, and allow investors to, evaluate the
operating performance of the Company on a comparable basis. |
|
* | To supplement the consolidated financial statements and guidance presented in accordance with
Generally Accepted Accounting Principles (GAAP), the Company describes what certain financial
measures would have been in the absence of restructuring and related costs. 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. 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. |