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8-K - FORM 8-K - WOLVERINE WORLD WIDE INC /DE/ | c19855e8vk.htm |
Exhibit 99.1
9341 Courtland Drive, Rockford, MI 49351 Phone (616) 866-5500; Fax (616) 866-0257 FOR IMMEDIATE RELEASE CONTACT: Don Grimes (616) 863-4404 |
WOLVERINE WORLDWIDE ANNOUNCES
RECORD REVENUE AND EARNINGS PER SHARE
FOR SECOND QUARTER 2011
RECORD REVENUE AND EARNINGS PER SHARE
FOR SECOND QUARTER 2011
Rockford, Michigan, July 12, 2011 Wolverine Worldwide (NYSE: WWW) today reported
double-digit growth in both revenue and earnings per share for the second quarter ended June 18,
2011, driven by the ongoing successful execution of the Companys growth strategies and elevated
demand for its lifestyle brands.
Second Quarter Highlights:
| Revenue of $310.1 million, growth of 20.1% vs. the prior year, representing the
fourth consecutive quarter of record revenue |
| Diluted earnings per share of $0.48, growth of 23.1% vs. adjusted fully diluted
earnings per share for the prior year and representing the sixth consecutive
quarter of record earnings |
| Double-digit revenue growth for all brand groups and the consumer direct
business |
| Double-digit revenue growth for all major geographic regions |
| Operating expenses of 28.6% as a percentage of revenue versus an adjusted 29.7%
in the prior year |
| Record operating margin of 10.8% |
| The Company reaffirms full year revenue and earnings guidance |
Our recent revenue performance clearly demonstrates the broad strength of our portfolio and
the benefits of consistent investment in brand-building initiatives, stated Blake W. Krueger,
Chairman and Chief Executive Officer. The outstanding financial results in the second quarter
were led by strong double-digit revenue increases in all branded groups, most notably in the
Outdoor Group and our Merrell brand.
2011 is an exciting time for Wolverine Worldwide, with many brands in our portfolio uniquely
positioned for success. Our Merrell brand continues to dominate the outdoor space with
cutting-edge product and new innovations such as the Merrell Barefoot Collection. In addition, our
Hush Puppies, Sebago, Cat Footwear, Wolverine, and Patagonia Footwear brands are all taking
advantage of current global lifestyle trends centered on heritage, Americana and authenticity.
more
Q2 2011 | page 2 |
Don Grimes, Senior Vice President and Chief Financial Officer, commented, We remain focused
on driving growth across the entire portfolio of brands while continuing to deliver superior
returns on invested capital. We believe the quarters excellent results underscore our efforts to
deliver near-term earnings growth while also investing for the future.
Additional details:
| A modestly weaker U.S. dollar contributed $6.3 million to reported revenue in
the quarter. |
| The Outdoor Group (consisting of Merrell Footwear and Apparel, Chaco and
Patagonia Footwear) led the way in the quarter, with revenue of $127.3 million,
growth of 30.0% vs. the prior year, followed by 17.5% revenue growth from the
Lifestyle Group (Hush Puppies, Sebago, Cushe and SoftStyle) and 15.0% revenue
growth from the Heritage Group (Wolverine, Caterpillar Footwear, Bates, HyTest and
Harley Davidson Footwear). Strong double-digit growth from the consumer direct
business was partially offset by softness in the Companys leather business. |
| Gross margin in the quarter was 39.4% compared to prior-year adjusted gross
margin of 40.3%. The decline in gross margin versus the prior year was primarily
attributable to negative results from the Companys owned manufacturing
operations. Reported gross margin for the second quarter 2010 was 40.2%. |
| Operating expenses as a percentage of revenue were 28.6% in the quarter, strong
leverage of 110 basis points when compared to an adjusted 29.7% in 2010. Reported
operating expenses grew to $88.8 million in the quarter, driven by higher variable
costs associated with the quarters revenue growth and continued brand-building
investments in advertising and marketing initiatives, including the support of the
Merrell Barefoot Collection. Reported operating expenses as a percentage of
revenue for the second quarter of 2010 were 30.6%. |
| The effective tax rate in the quarter was 25.7% and includes the favorable
settlement of a state tax audit and a more favorable dispersion of taxable income
to lower-tax jurisdictions. |
more
Q2 2011 | page 3 |
| Fully diluted earnings were a record $0.48 per share compared to adjusted fully
diluted earnings of $0.39 per share in the prior year, an increase of 23.1%. The
prior years adjusted earnings exclude the impact of restructuring charges and
other expenses related to a strategic restructuring plan that was completed in the
second quarter of 2010. Reported fully diluted earnings for the second quarter of
2010 were $0.35 per share. |
| The Company repurchased approximately 479,000 of its own shares in the quarter
for an aggregate cost of $18.1 million. Through the end of the second quarter,
the Company has repurchased approximately 621,000 shares for a total cost of $23.1
million. The Company has a solid balance sheet, with little debt and $118.5
million of cash and cash equivalents at the end of the second quarter. |
Today, the Company is reaffirming both its full-year revenue estimate of $1.380 billion to
$1.420 billion (representing growth of 10.5% to 13.7%) and its fully diluted earnings per share
estimate of $2.40 to $2.50 (representing growth of 10.6% to 15.2% versus the prior years adjusted
earnings per share and growth of 13.7% to 18.5% versus the prior years reported earnings per
share). Included in the earnings guidance are the outlooks for flat full-year gross margin and
modest full-year operating expense leverage.
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 Investor Relations in the navigation bar, and then
click on Webcasts & Presentations from the side navigation bar of the Investor Relations page.
To listen to the webcast, your computer must have a streaming 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
September 12, 2011.
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 footwear licensee of popular brands including
CAT®,
Harley-Davidson® and Patagonia®. The Companys
products are carried by leading retailers in the U.S. and globally in more than 190 countries and
territories. For additional information, please visit our website, www.wolverineworldwide.com.
more
Q2 2011 | page 4 |
This press release contains forward-looking statements. In addition, words such as
estimates, anticipates, believes, forecasts, plans, predicts, projects, is likely,
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. Risk Factors include, among others: the Companys ability to
successfully develop its brands and businesses; changes in duty structures in countries of import
and export including anti-dumping measures and trade defense actions; changes in consumer
preferences or spending patterns; cancellation of orders for future delivery, or the failure of the
Department of Defense to exercise future purchase options, award new contracts or the cancellation
of existing contracts by the Department of Defense or other military purchasers; changes in planned
customer demand, re-orders or at-once orders; the availability and pricing of footwear
manufacturing capacity; reliance on foreign sourcing; failure of international licensees and
distributors to meet sales goals or to make timely payments on amounts owed; disruption of
technology systems; regulatory or other changes affecting the supply or price 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; the development of new initiatives; the risks of doing business in developing
countries, and politically or economically volatile areas; retail buying patterns; consolidation in
the retail sector; changes in economic and market conditions; acts and effects of war 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 | 24 Weeks Ended | |||||||||||||||
June 18, | June 19, | June 18, | June 19, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | 310,139 | $ | 258,199 | $ | 641,012 | $ | 543,096 | ||||||||
Cost of products sold |
188,022 | 154,093 | 381,096 | 320,420 | ||||||||||||
Restructuring and related costs |
| 425 | | 1,406 | ||||||||||||
Gross profit |
122,117 | 103,681 | 259,916 | 221,270 | ||||||||||||
Gross margin |
39.4 | % | 40.2 | % | 40.5 | % | 40.7 | % | ||||||||
Selling, general and administrative expenses |
88,751 | 76,720 | 177,080 | 155,260 | ||||||||||||
Restructuring and related costs |
| 2,311 | | 2,828 | ||||||||||||
Operating expenses |
88,751 | 79,031 | 177,080 | 158,088 | ||||||||||||
Operating expenses as a % of revenue |
28.6 | % | 30.6 | % | 27.6 | % | 29.1 | % | ||||||||
Operating profit |
33,366 | 24,650 | 82,836 | 63,182 | ||||||||||||
Operating margin |
10.8 | % | 9.5 | % | 12.9 | % | 11.6 | % | ||||||||
Interest expense (income), net |
129 | (4 | ) | 354 | 85 | |||||||||||
Other expense, net |
973 | 395 | 393 | 165 | ||||||||||||
1,102 | 391 | 747 | 250 | |||||||||||||
Earnings before income taxes |
32,264 | 24,259 | 82,089 | 62,932 | ||||||||||||
Income taxes |
8,301 | 7,037 | 22,246 | 18,251 | ||||||||||||
Effective tax rate |
25.7 | % | 29.0 | % | 27.1 | % | 29.0 | % | ||||||||
Net earnings |
$ | 23,963 | $ | 17,222 | $ | 59,843 | $ | 44,681 | ||||||||
Diluted earnings per share |
$ | 0.48 | $ | 0.35 | $ | 1.20 | $ | 0.89 | ||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
($000s)
(Unaudited)
($000s)
June 18, | June 19, | |||||||
2011 | 2010 | |||||||
ASSETS: |
||||||||
Cash & cash equivalents |
$ | 118,478 | $ | 110,120 | ||||
Receivables |
226,739 | 183,221 | ||||||
Inventories |
249,871 | 170,773 | ||||||
Other current assets |
25,983 | 20,628 | ||||||
Total current assets |
621,071 | 484,742 | ||||||
Property, plant & equipment, net |
76,739 | 70,555 | ||||||
Other assets |
135,687 | 130,043 | ||||||
Total Assets |
$ | 833,497 | $ | 685,340 | ||||
LIABILITIES & EQUITY: |
||||||||
Current maturities on long-term debt |
$ | 539 | $ | 492 | ||||
Revolving credit agreement |
20,000 | | ||||||
Accounts payable and other accrued liabilities |
141,930 | 109,613 | ||||||
Total current liabilities |
162,469 | 110,105 | ||||||
Long-term debt |
| 492 | ||||||
Other non-current liabilities |
76,765 | 96,632 | ||||||
Stockholders equity |
594,263 | 478,111 | ||||||
Total Liabilities & Equity |
$ | 833,497 | $ | 685,340 | ||||
WOLVERINE WORLD WIDE, INC.
REVENUE BY OPERATING GROUP
(Unaudited)
($000s)
(Unaudited)
($000s)
2nd Quarter Ended | ||||||||||||||||||||||||
June 18, 2011 | June 19, 2010 | Change | ||||||||||||||||||||||
Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
Outdoor Group |
$ | 127,258 | 41.0 | % | $ | 97,857 | 37.9 | % | $ | 29,401 | 30.0 | % | ||||||||||||
Heritage Group |
102,859 | 33.2 | % | 89,443 | 34.6 | % | 13,416 | 15.0 | % | |||||||||||||||
Lifestyle Group |
41,506 | 13.4 | % | 35,327 | 13.7 | % | 6,179 | 17.5 | % | |||||||||||||||
Other |
3,655 | 1.2 | % | 2,520 | 1.0 | % | 1,135 | 45.0 | % | |||||||||||||||
Total branded footwear, apparel
and licensing revenue |
275,278 | 88.8 | % | 225,147 | 87.2 | % | 50,131 | 22.3 | % | |||||||||||||||
Other business units |
34,861 | 11.2 | % | 33,052 | 12.8 | % | 1,809 | 5.5 | % | |||||||||||||||
Total Revenue |
$ | 310,139 | 100.0 | % | $ | 258,199 | 100.0 | % | $ | 51,940 | 20.1 | % | ||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($000s)
(Unaudited)
($000s)
24 Weeks Ended | ||||||||
June 18, | June 19, | |||||||
2011 | 2010 | |||||||
OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | 59,843 | $ | 44,681 | ||||
Adjustments necessary to reconcile net cash
(used in) provided by operating activities: |
||||||||
Depreciation and amortization |
7,555 | 7,854 | ||||||
Deferred income taxes |
(1,093 | ) | (649 | ) | ||||
Stock-based compensation expense |
7,377 | 5,110 | ||||||
Excess tax benefits from stock-based compensation expense |
(1,770 | ) | (873 | ) | ||||
Pension expense |
8,078 | 7,517 | ||||||
Pension contribution |
(31,800 | ) | (10,400 | ) | ||||
Restructuring and other transition costs |
| 4,234 | ||||||
Cash payments related to restructuring |
(680 | ) | (6,912 | ) | ||||
Other |
(224 | ) | 8,510 | |||||
Changes in operating assets and liabilities |
(67,005 | ) | (48,739 | ) | ||||
Net cash (used in) provided by operating activities |
(19,719 | ) | 10,333 | |||||
INVESTING ACTIVITIES: |
||||||||
Additions to property, plant and equipment |
(9,182 | ) | (5,102 | ) | ||||
Other |
(1,410 | ) | (890 | ) | ||||
Net cash used in investing activities |
(10,592 | ) | (5,992 | ) | ||||
FINANCING ACTIVITIES: |
||||||||
Net borrowings under revolver |
20,000 | | ||||||
Cash dividends paid |
(11,194 | ) | (10,799 | ) | ||||
Purchase of common stock for treasury |
(23,146 | ) | (47,193 | ) | ||||
Other |
9,336 | 7,529 | ||||||
Net cash used in financing activities |
(5,004 | ) | (50,463 | ) | ||||
Effect of foreign exchange rate changes |
3,393 | (4,197 | ) | |||||
Decrease in cash and cash equivalents |
(31,922 | ) | (50,319 | ) | ||||
Cash and cash equivalents at beginning of year |
150,400 | 160,439 | ||||||
Cash and cash equivalents at end of year |
$ | 118,478 | $ | 110,120 | ||||
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 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:
As Reported | As Adjusted | |||||||||||
2nd Quarter Ended | Restructuring and | 2nd Quarter Ended | ||||||||||
June 19, 2010 | Related Costs(a) | June 19, 2010 | ||||||||||
Gross profit |
$ | 103,681 | $ | 425 | $ | 104,106 | ||||||
Gross margin |
40.2 | % | 40.3 | % | ||||||||
Operating expenses |
$ | 79,031 | $ | (2,311 | ) | $ | 76,720 | |||||
% of revenue |
30.6 | % | 29.7 | % | ||||||||
Diluted earnings per share |
$ | 0.35 | $ | 0.04 | $ | 0.39 | ||||||
As Reported | As Adjusted | |||||||||||
Fiscal Year Ended | Restructuring and | Fiscal Year Ended | ||||||||||
January 1, 2011 | Related Costs(a) | January 1, 2011 | ||||||||||
Diluted earnings per share |
$ | 2.11 | $ | 0.06 | $ | 2.17 |
(a) | These adjustments present the Companys results of operations on a
continuing basis without the effects of fluctuations in restructuring
and related costs. The adjusted financial results 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 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. |