ROCKFORD, Mich., July 26, 2016 /PRNewswire/ -- Wolverine
World Wide, Inc. (NYSE: WWW) today reported financial results for
the second quarter ended June 18,
2016. Adjusted financial results exclude restructuring and
impairment costs. References to underlying revenue indicate
reported revenue adjusted for the impact of foreign exchange,
retail store closures, and the exit of the Cushe business.
"We delivered better-than-expected results for the second
quarter," said Blake W. Krueger,
Wolverine Worldwide's Chairman, Chief Executive Officer and
President. "Equally important, we continued to drive progress
against our key strategic initiatives, which are designed to
accelerate growth and improve earnings performance through a
relentless focus on the consumer, product innovation, and
compelling storytelling. While the global retail environment
continues to be volatile, our diversified business model - built
around an industry-leading portfolio of brands - served us well in
the quarter, and we expect that it will continue to be a critical
competitive advantage for us in the future."
SECOND-QUARTER 2016 REVIEW
- Reported revenue of $583.7
million was in line with expectations, declining 7.4% versus
the prior year. Underlying revenue declined 5.2% versus the prior
year.
- Reported gross margin was 38.8%, compared to 39.1% in the prior
year. Gross margin on a constant currency basis was 39.8%, an
increase of 70 basis points versus the prior year.
- Reported operating margin was 7.2%, compared to 7.6% in the
prior year. Adjusted operating margin on a constant currency basis
was 8.4%, up 30 basis points versus the prior year's adjusted
operating margin.
- Reported diluted earnings per share were $0.24 in the current and prior year quarter.
Adjusted diluted earnings per share were $0.25, which exceeded expectations, and on a
constant currency basis were $0.30,
compared to $0.27 in the prior
year.
- Inventory balances at the end of the quarter were 2.9% lower
than the prior year.
- Cash and cash equivalents were $221.7
million. Reported debt was $808.0
million, which resulted in net debt of $586.3 million at quarter end.
- The Company repurchased 136,521 shares during the quarter at an
average price of $17.94 per
share.
"We are pleased with our performance for the second quarter,"
stated Mike Stornant, Senior Vice
President and Chief Financial Officer. "Our team's
disciplined execution of our business model allowed us to
effectively manage inventory below last year's level. Looking
ahead, we plan to leverage our operational strengths to enhance
earnings and drive greater value for our shareholders."
FISCAL 2016 OUTLOOK
The Company is reaffirming its revenue and reported and adjusted
diluted earnings per share outlook for fiscal 2016, as well as its
expectation for inventory levels, as follows:
- Consolidated reported revenue in the range of $2.475 billion to $2.575 billion, a decline in
the range of approximately 8.0% to 4.3% on a reported basis and
5.0% to 1.0% on an underlying basis.
- Reported diluted earnings per share in the range of
$1.16 to $1.26. Adjusted diluted
earnings per share in the range of $1.30 to
$1.40. On a constant currency basis, adjusted earnings per
share in the range of $1.48 to
$1.58.
- Inventory levels to be meaningfully lower than 2015 at
year-end.
EARNINGS CALL INFORMATION
The Company will host
a conference call today at 8:30 a.m. Eastern
Time to discuss these results and current business
trends. The conference call will be broadcast live and
accessible under the "Investor Relations" tab at
wolverineworldwide.com. A replay of the conference call will
be available at the Company's website for a period of approximately
30 days.
ABOUT WOLVERINE WORLDWIDE
With a commitment to
service and product excellence, Wolverine World Wide, Inc. is one
of the world's leading marketers of branded casual, active
lifestyle, work, outdoor sport, athletic, children's and uniform
footwear and apparel. The Company's portfolio of highly
recognized brands includes: Merrell®,
Sperry®, Hush Puppies®, Saucony®,
Wolverine®, Keds®, Stride Rite®,
Sebago®, Chaco®, Bates®, and
HYTEST®. The Company also is the global footwear
licensee of the popular brands Cat® and
Harley-Davidson®. The Company's products are
carried by leading retailers in the U.S. and globally in
approximately 200 countries and territories. For additional
information, please visit our website, wolverineworldwide.com
FORWARD-LOOKING STATEMENTS
This press release
contains forward-looking statements, including statements
regarding: the Company's ability to successfully execute key
strategic initiatives, the Company's ability to accelerate growth
and improve earnings performance; the advantages of the Company's
diversified business model; the Company's ability to leverage
operational strengths to enhance earnings and drive shareholder
value; and the Company's fiscal 2016 guidance. In addition, words
such as "guidance," "estimates," "anticipates," "believes,"
"forecasts," "step," "plans," "predicts," "projects," "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: 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;
currency fluctuations; currency restrictions; 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 owned and
contract manufacturers; labor disruptions; changes in relationships
with, including the loss of, significant wholesale customers; the
failure of the U.S. Department of Defense to exercise future
purchase options or award new contracts, or the cancellation or
modification of existing contracts by the Department of Defense or
other military purchasers; risks related to the significant
investment in, and performance of, the Company's consumer-direct
operations; risks related to the expanding into new markets and
complementary product categories as well as consumer-direct
operations; 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
customers; increase 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; the potential breach of the Company's databases, or those of
its vendors, which contain certain personal information or payment
card data; problems affecting the Company's 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 acquired
intangibles; the success of the Company's consumer-direct
realignment initiatives; changes in future pension funding
requirements and pension expenses; and additional factors discussed
in the Company's reports filed with the Securities and Exchange
Commission and exhibits thereto. The foregoing Risk Factors, as
well as other existing Risk Factors and new Risk Factors that
emerge from time to time, 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)
|
(In millions,
except per share data)
|
|
|
12 Weeks
Ended
|
|
24 Weeks
Ended
|
|
June 18,
2016
|
|
June 20,
2015
|
|
June 18,
2016
|
|
June 20,
2015
|
Revenue
|
$
|
583.7
|
|
|
$
|
630.1
|
|
|
$
|
1,161.3
|
|
|
$
|
1,261.5
|
|
Cost of goods
sold
|
357.1
|
|
|
383.7
|
|
|
702.0
|
|
|
753.7
|
|
Restructuring
costs
|
—
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
Gross
profit
|
226.6
|
|
|
246.4
|
|
|
455.4
|
|
|
507.8
|
|
Gross
margin
|
38.8
|
%
|
|
39.1
|
%
|
|
39.2
|
%
|
|
40.3
|
%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
183.0
|
|
|
195.1
|
|
|
367.1
|
|
|
393.9
|
|
Restructuring and
impairment costs
|
1.8
|
|
|
3.7
|
|
|
12.5
|
|
|
2.7
|
|
Operating
expenses
|
184.8
|
|
|
198.8
|
|
|
379.6
|
|
|
396.6
|
|
Operating expenses
as a % of revenue
|
31.7
|
%
|
|
31.6
|
%
|
|
32.7
|
%
|
|
31.4
|
%
|
|
|
|
|
|
|
|
|
Operating
profit
|
41.8
|
|
|
47.6
|
|
|
75.8
|
|
|
111.2
|
|
Operating
margin
|
7.2
|
%
|
|
7.6
|
%
|
|
6.5
|
%
|
|
8.8
|
%
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
7.8
|
|
|
9.0
|
|
|
16.3
|
|
|
18.5
|
|
Other expense,
net
|
1.1
|
|
|
1.8
|
|
|
1.0
|
|
|
0.8
|
|
Total other
expenses
|
8.9
|
|
|
10.8
|
|
|
17.3
|
|
|
19.3
|
|
Earnings before
income taxes
|
32.9
|
|
|
36.8
|
|
|
58.5
|
|
|
91.9
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
8.8
|
|
|
11.6
|
|
|
16.8
|
|
|
26.6
|
|
Effective tax
rate
|
26.7
|
%
|
|
31.4
|
%
|
|
28.8
|
%
|
|
28.9
|
%
|
|
|
|
|
|
|
|
|
Net
earnings
|
24.1
|
|
|
25.2
|
|
|
41.7
|
|
|
65.3
|
|
|
|
|
|
|
|
|
|
Less: net earnings
(loss) attributable to noncontrolling
interests
|
0.1
|
|
|
(0.1)
|
|
|
0.3
|
|
|
(0.1)
|
|
Net earnings
attributable to Wolverine World Wide,
Inc.
|
$
|
24.0
|
|
|
$
|
25.3
|
|
|
$
|
41.4
|
|
|
$
|
65.4
|
|
Diluted earnings per
share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
|
|
|
|
Net earnings used to
calculate diluted earnings per
share
|
$
|
23.5
|
|
|
$
|
24.9
|
|
|
$
|
40.5
|
|
|
$
|
64.3
|
|
Shares used to
calculate earnings per share
|
96.1
|
|
|
101.6
|
|
|
96.1
|
|
|
101.3
|
|
Weighted average
shares outstanding
|
99.5
|
|
|
103.2
|
|
|
99.4
|
|
|
102.8
|
|
WOLVERINE WORLD
WIDE, INC.
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
June 18,
2016
|
|
June 20,
2015
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
221.7
|
|
|
$
|
220.7
|
|
Accounts receivables,
net
|
312.6
|
|
|
355.3
|
|
Inventories,
net
|
439.3
|
|
|
452.2
|
|
Other current
assets
|
46.9
|
|
|
79.8
|
|
Total current
assets
|
1,020.5
|
|
|
1,108.0
|
|
Property, plant and
equipment, net
|
149.3
|
|
|
137.3
|
|
Goodwill and other
indefinite-lived intangibles
|
1,117.3
|
|
|
1,124.4
|
|
Other non-current
assets
|
166.4
|
|
|
173.3
|
|
Total
assets
|
$
|
2,453.5
|
|
|
$
|
2,543.0
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Accounts payable and
other accrued liabilities
|
$
|
311.3
|
|
|
$
|
345.8
|
|
Current maturities of
long-term debt
|
19.7
|
|
|
45.2
|
|
Total current
liabilities
|
331.0
|
|
|
391.0
|
|
Long-term
debt
|
788.3
|
|
|
776.3
|
|
Other non-current
liabilities
|
332.2
|
|
|
376.9
|
|
Stockholders'
equity
|
1,002.0
|
|
|
998.8
|
|
Total liabilities and
stockholders' equity
|
$
|
2,453.5
|
|
|
$
|
2,543.0
|
|
WOLVERINE WORLD
WIDE, INC.
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
24 Weeks
Ended
|
|
June 18,
2016
|
|
June 20,
2015
|
OPERATING
ACTIVITIES:
|
|
|
|
Net
earnings
|
$
|
41.7
|
|
|
$
|
65.3
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
20.3
|
|
|
21.7
|
|
Stock-based
compensation expense
|
11.5
|
|
|
14.1
|
|
Excess tax benefits
from stock-based compensation
|
(0.1)
|
|
|
(3.8)
|
|
Pension and SERP
expense
|
4.8
|
|
|
12.9
|
|
Restructuring and
impairment costs
|
16.4
|
|
|
2.7
|
|
Other
|
(17.9)
|
|
|
(7.0)
|
|
Changes in operating
assets and liabilities
|
(3.9)
|
|
|
(11.0)
|
|
Net cash provided by
operating activities
|
72.8
|
|
|
94.9
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Additions to
property, plant and equipment
|
(28.2)
|
|
|
(15.8)
|
|
Investment in joint
venture
|
(0.5)
|
|
|
—
|
|
Other
|
2.7
|
|
|
3.2
|
|
Net cash used in
investing activities
|
(26.0)
|
|
|
(12.6)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Payments on long-term
debt
|
(2.8)
|
|
|
(67.7)
|
|
Cash dividends
paid
|
(11.8)
|
|
|
(12.3)
|
|
Purchase of common
stock for treasury
|
(6.0)
|
|
|
(5.9)
|
|
Purchases of shares
under employee stock plans
|
(4.3)
|
|
|
(7.5)
|
|
Proceeds from the
exercise of stock options
|
2.2
|
|
|
8.5
|
|
Excess tax benefits
from stock-based compensation
|
0.1
|
|
|
3.8
|
|
Contributions from
noncontrolling interests
|
1.3
|
|
|
—
|
|
Net cash used in
financing activities
|
(21.3)
|
|
|
(81.1)
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
2.1
|
|
|
(4.3)
|
|
Increase (decrease)
in cash and cash equivalents
|
27.6
|
|
|
(3.1)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of the year
|
194.1
|
|
|
223.8
|
|
Cash and cash
equivalents at end of the period
|
$
|
221.7
|
|
|
$
|
220.7
|
|
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.
|
|
Q2 2016
RECONCILIATION TABLES
|
|
|
RECONCILIATION OF
REPORTED REVENUE TO
|
UNDERLYING
REVENUE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
Fiscal 2016
Q2
|
|
Foreign
Exchange
Impact
|
|
Fiscal
2016 Q2
Constant
Currency
Basis
|
|
GAAP
Basis
Fiscal 2015
Q2
|
|
Adjustments
(1)
|
|
Fiscal
2015 Q2
Adjusted
Basis
|
|
Underlying
Growth
|
|
Reported
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
583.7
|
|
|
$
|
3.0
|
|
|
$
|
586.7
|
|
|
$
|
630.1
|
|
|
$
|
(11.4)
|
|
|
$
|
618.7
|
|
|
(5.2)%
|
|
|
(7.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments include the
impact from retail stores closures and the exit of the Cushe
business.
|
RECONCILIATION OF
REPORTED GROSS MARGIN TO ADJUSTED
|
GROSS MARGIN ON A
CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Foreign
Exchange Impact
|
|
As Adjusted on
a Constant
Currency Basis
|
|
|
|
|
|
|
Gross Profit - Fiscal
2016 Q2
|
226.6
|
|
|
$
|
6.9
|
|
|
233.5
|
|
|
|
|
|
|
|
Gross
margin
|
38.8
|
%
|
|
|
|
39.8
|
%
|
|
|
|
|
|
|
Gross Profit - Fiscal
2015 Q2
|
$
|
246.4
|
|
|
|
|
$
|
246.4
|
|
|
|
|
|
|
|
Gross
margin
|
39.1
|
%
|
|
|
|
39.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED OPERATING MARGIN TO ADJUSTED
|
OPERATING MARGIN
ON A CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Foreign
Exchange Impact
|
|
Adjustments
(1)
|
|
As Adjusted on
a
Constant
Currency Basis
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2016 Q2
|
$
|
41.8
|
|
|
$
|
5.9
|
|
|
$
|
1.8
|
|
|
$
|
49.5
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
7.2
|
%
|
|
|
|
|
|
8.4
|
%
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2015 Q2
|
$
|
47.6
|
|
|
|
|
$
|
3.7
|
|
|
$
|
51.3
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
7.6
|
%
|
|
|
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Fiscal 2016 Q2 and fiscal 2015 Q2 Adjustments include restructuring
and impairment costs.
|
RECONCILIATION OF
REPORTED DILUTED EPS TO ADJUSTED DILUTED EPS ON A CONSTANT CURRENCY
BASIS*
|
(Unaudited)
|
|
|
GAAP Basis
EPS
|
|
Adjustments
(1)
|
|
As Adjusted
EPS
|
|
Foreign
Exchange
Impact
|
|
As Adjusted
EPS On a
Constant
Currency Basis
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2016
Q2
|
$
|
0.24
|
|
|
$
|
0.01
|
|
|
$
|
0.25
|
|
|
$
|
0.05
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2015
Q2
|
$
|
0.24
|
|
|
$
|
0.03
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Fiscal 2016 Q2 and fiscal 2015 Q2 Adjustments include restructuring
and impairment costs.
|
RECONCILIATION OF
REPORTED DEBT TO NET DEBT*
|
(Unaudited)
|
(In
millions)
|
|
|
Fiscal 2016
Q2
|
|
|
GAAP reported
debt
|
$
|
808.0
|
|
Cash and cash
equivalents
|
(221.7)
|
|
Net debt
|
$
|
586.3
|
|
2016 GUIDANCE
RECONCILIATION TABLES
|
|
RECONCILIATION OF
FISCAL 2016 FULL-YEAR REPORTED REVENUE GROWTH
|
GUIDANCE TO
UNDERLYING REVENUE GROWTH GUIDANCE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
Full-Year
Revenue
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(1)
|
|
Underlying
Full-
Year Revenue
|
|
|
|
|
|
|
|
|
Fiscal 2016 Revenue
Guidance
|
$
2,475 - 2,575
|
|
$
|
40.0
|
|
|
|
|
$
2,515 - 2,615
|
Fiscal 2015
Revenue
|
$
2,691.6
|
|
|
|
$
|
(63.6)
|
|
|
$
2,628.0
|
Percentage
growth
|
(8.0) -
(4.3)%
|
|
|
|
|
|
(4.3) -
(0.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments include the impact from retail store closures and the
exited Cushe business.
|
RECONCILIATION OF
FISCAL 2016 FULL-YEAR DILUTED EPS GUIDANCE TO ADJUSTED DILUTED EPS
ON A CONSTANT CURRENCY BASIS GUIDANCE*
|
(Unaudited)
|
|
|
GAAP
Basis
Full-Year 2016
Guidance
|
|
Adjustments
(1)
|
|
As
Adjusted
Full-Year 2016
Guidance
|
|
Foreign
Exchange
Impact
|
|
As
Adjusted
Full-Year 2016
Guidance Constant
Currency Basis
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$ 1.16
- 1.26
|
|
$
|
0.14
|
|
|
$ 1.30
- 1.40
|
|
$
|
0.18
|
|
|
$ 1.48
- 1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Fiscal 2016 Full-Year
Guidance Adjustments include estimated restructuring
costs.
|
|
|
|
|
|
|
|
|
|
*
|
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 if
restructuring and impairment costs were excluded. The Company
also describes underlying revenue, which excludes the impact of
foreign exchange, the impact of retail store closures and the exit
of the Cushe business in fiscal 2016. 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 Company
has defined net debt as debt less cash and cash equivalents.
The Company believes that netting these sources of cash against
debt provides a clearer picture of the future demands on cash to
repay debt. The Company evaluates results of operations on
both a reported and a constant currency 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 our 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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wolverine-worldwide-announces-second-quarter-results-and-reaffirms-full-year-outlook-300303712.html
SOURCE Wolverine Worldwide, Inc.