First Quarter 2022
Highlights
- Net sales increased 22 percent to a record $761.5 million,
compared to first quarter 2021.
- Operating income increased 19 percent to $83.7 million, or
11.0 percent of net sales, compared to first quarter 2021 operating
income of $70.5 million, or 11.3 percent of net sales.
- Diluted earnings per share increased 23 percent to $1.03,
compared to first quarter 2021 diluted earnings per share of
$0.84.
- The Company repurchased $217.3 million of common stock
during the first quarter.
- On April 22, 2022, the Board of Directors approved a $500
million increase to the Company's share repurchase
authorization.
Full Year 2022 Financial
Outlook
The following forward-looking statements reflect our
expectations as of April 28, 2022 and are subject to significant
risks and business uncertainties, including those factors described
under “Forward-Looking Statements” below. Additional disclosures
and financial outlook details can be found in the Full Year 2022
Financial Outlook section below, our Current Report on Form 8-K
filed April 28, 2022, and the CFO Commentary and Financial Review
presentation attached thereto.
- Net sales of $3.63 to $3.69 billion (unchanged) representing
net sales growth of 16 to 18 percent (unchanged) compared to
2021.
- Operating income of $477 to $502 million (prior $472 to $498
million), representing operating margin of 13.2 to 13.6 percent
(prior 13.0 to 13.5 percent).
- Diluted earnings per share of $5.70 to $6.00 (prior $5.50 to
$5.80).
Columbia Sportswear Company (NASDAQ: COLM, the "Company"), a
leading innovator in outdoor, active and everyday lifestyle
apparel, footwear, accessories and equipment products, today
announced first quarter 2022 financial results for the period ended
March 31, 2022.
Chairman, President and Chief Executive Officer Tim Boyle
commented, "Our strong financial performance in the first quarter,
including 22 percent net sales and 23 percent diluted earnings per
share growth, validates our strategies and demonstrates that our
brands are resonating with consumers. Business momentum was broad
based, with growth across all brands, channels and geographies.
SOREL led the charge with 37 percent year-over-year growth, despite
supply challenges, highlighting phenomenal demand for the brand’s
year-round styles. We are confident in our ability to realize the
tangible growth opportunities that we have ahead, and this
confidence is reflected in our repurchase of over $200 million in
common stock during the quarter.
"Based on an encouraging start to 2022 and lower share count, we
are increasing our full year earnings and diluted earnings per
share outlook and reiterating our net sales outlook despite
removing future sales to our Russian-based distributor for the
balance of the year.
“Our profitable growth trajectory, fortress balance sheet and
global team of dedicated employees provide a foundation of strength
from which we will continue to invest in our strategic priorities
to:
- drive brand awareness and sales growth through increased,
focused demand creation investments;
- enhance consumer experience and digital capabilities in all our
channels and geographies;
- expand and improve global direct-to-consumer operations with
supporting processes and systems; and
- invest in our people and optimize our organization across our
portfolio of brands."
CFO's Commentary and Financial Review
Presentation Available Online
For a detailed review of the Company's first quarter 2022
financial results, please refer to the CFO Commentary and Financial
Review presentation furnished to the Securities and Exchange
Commission (the "SEC") on a Current Report on Form 8-K and
published on the Investor Relations section of the Company's
website at http://investor.columbia.com/results.cfm at
approximately 4:15 p.m. ET today. Analysts and investors are
encouraged to review this commentary prior to participating in our
conference call.
First Quarter 2022 Financial
Results
(All comparisons are between first quarter 2022 and first
quarter 2021, unless otherwise noted.)
Net sales increased 22 percent to $761.5 million from
$625.6 million for the comparable period in 2021. The increase in
net sales primarily reflects strong consumer demand and shipments
of higher Spring 2022 orders, with growth across all brands,
channels and geographies.
Gross margin contracted 170 basis points to 49.7 percent
of net sales from 51.4 percent of net sales for the comparable
period in 2021. Gross margin contraction was primarily driven by
higher inbound freight costs, unfavorable year-over-year changes in
inventory provisions, unfavorable regional sales mix, and lower
wholesale product margins, partially offset by higher
direct-to-consumer ("DTC") product margins.
SG&A expenses increased 18 percent to $299.1 million,
or 39.3 percent of net sales, from $254.4 million, or 40.7 percent
of net sales, for the comparable period in 2021. SG&A expense
growth primarily reflects expenses to support the growth of the
business and investments to drive our brand-led consumer-focused
strategies. The increase in SG&A expenses includes higher
demand creation, global retail and personnel expenses, and
unfavorable year-over-year changes in bad debt provisions compared
to first quarter 2021.
Operating income increased 19 percent to $83.7 million,
or 11.0 percent of net sales, compared to operating income of $70.5
million, or 11.3 percent of net sales, for the comparable period in
2021.
Income tax expense of $17.3 million resulted in an
effective income tax rate of 20.5 percent, compared to a $14.6
million expense, or an effective tax rate of 20.7 percent, for the
comparable period in 2021.
Net income increased 20 percent to $66.8 million, or
$1.03 per diluted share, compared to net income of $55.9 million,
or $0.84 per diluted share, for the comparable period in 2021.
Balance Sheet as of March 31,
2022
Cash, cash equivalents and short-term investments totaled $610.3
million, compared to $874.6 million as of March 31, 2021.
The Company had no borrowings as of March 31, 2022 or 2021.
Inventories increased 36 percent to $714.4 million, compared to
$525.7 million as of March 31, 2021. Inventory at quarter-end
primarily consisted of current and future season product. Aged
inventories represent a manageable portion of our total inventory
mix.
Cash Flow for the Three Months Ended
March 31, 2022
Net cash used in operating activities was $33.8 million,
compared to net cash provided by operating activities of $110.9
million for the same period in 2021.
Capital expenditures totaled $12.9 million, compared to $3.9
million for the same period in 2021.
Share Repurchases for the Three Months
Ended March 31, 2022
The Company repurchased 2,328,623 shares of common stock for an
aggregate of $217.3 million, or an average price per share of
$93.32.
At March 31, 2022, $99.0 million remained available under our
stock repurchase authorization. On April 22, 2022, the Board of
Directors authorized a $500 million increase to the Company's share
repurchase authorization, which does not obligate the Company to
acquire any specific number of shares or to acquire shares over any
specified period of time.
Quarterly Cash Dividend
The Board of Directors approved a regular quarterly cash
dividend of $0.30 per share, payable on June 2, 2022 to
shareholders of record on May 19, 2022.
Full Year 2022 Financial
Outlook
(Additional financial outlook details can be found in the CFO
Commentary and Financial Review presentation.)
The Company's 2022 Financial Outlook is forward-looking in
nature, and the following forward-looking statements reflect our
expectations as of April 28, 2022 and are subject to significant
risks and business uncertainties, including those factors described
under “Forward-Looking Statements” below. These risks and
uncertainties limit our ability to accurately forecast results.
This outlook reflects our estimates as of April 28, 2022 regarding
the impact of the COVID-19 pandemic on our operations; economic
conditions, including inflationary pressures; supply chain
disruptions, constraints and expenses; labor shortages; changes in
consumer behavior and confidence; as well as geopolitical tensions.
However, it is not possible to determine the ultimate impact on
future operations, or whether other currently unanticipated direct
or indirect consequences of the COVID-19 pandemic, geopolitical
tensions or the supply chain are reasonably likely to materially
affect our operations. This outlook and commentary assumes no
meaningful deterioration of current supply chain conditions, market
conditions, geopolitical tensions or the ongoing COVID-19 pandemic.
Projections are predicated on normal seasonal weather globally.
Net sales are expected to increase 16 to 18 percent
(unchanged) to $3.63 to $3.69 billion (unchanged) from $3.13
billion in 2021. We have paused taking any new orders from our
Russia-based distributor and removed any future sales to it from
this outlook. This equates to an approximate 2 percent headwind to
full year 2022 consolidated net sales.
Gross margin is expected to contract approximately 130
basis points (prior approximately 160 bps contraction) to
approximately 50.3 percent (prior approximately 50 percent) of net
sales from 51.6 percent of net sales in 2021.
SG&A expenses are expected to increase at a slightly
slower rate than net sales growth. SG&A expense as a percent of
net sales is expected to be 37.3 to 37.7 percent (prior 37.2 to
37.5 percent), compared to SG&A expenses as a percent of net
sales of 37.8 percent in 2021. Demand creation as a percent of net
sales is anticipated to be 6.0 percent in 2022, compared to 5.9
percent in 2021.
Operating income is expected to be $477 to $502 million
(prior $472 to $498 million), resulting in operating margin of 13.2
to 13.6 percent (prior 13.0 to 13.5 percent), compared to operating
margin of 14.4 percent in 2021.
Effective income tax rate is expected to be approximately
24.0 to 24.5 percent (unchanged). The effective income tax rate may
be affected by unanticipated impacts from changes in international,
federal or state tax policies, changes in the Company's geographic
mix of pre-tax income, other discrete events, as well as
differences from our estimate of the tax benefits associated with
employee equity awards and our estimate of the tax impact of
various tax initiatives.
Net income is expected to be $363 to $382 million (prior
$359 to $379 million), resulting in diluted earnings per share of
$5.70 to $6.00 (prior $5.50 to $5.80). This diluted earnings per
share range is based on estimated weighted average diluted shares
outstanding of 63.6 million.
Foreign Currency
- Foreign currency translation is anticipated to reduce 2022 net
sales growth by approximately 120 basis points.
- Foreign currency is expected to have essentially no impact on
earnings as unfavorable foreign currency translation impacts are
anticipated to be offset by foreign currency transactional effects
from hedging of production.
Balance Sheet and Cash Flows
Operating cash flow is expected to be at least $170
million.
Capital expenditures are planned to be between $80 to
$100 million.
First Half 2022 Financial Commentary
- Net sales growth of low-teens percent (prior high-teens
to low-20 percent), compared to first half 2021. The revision to
our first half 2022 net sales outlook is primarily due to the
removal of future sales to our Russia-based distributor and the
financial impact of recent mandatory quarantines in China, related
to the continued COVID-19 outbreak in that region.
- Gross margin is anticipated to contract approximately
200 basis points (prior over 300 basis points) compared to first
half 2021.
- SG&A expenses are anticipated to grow faster than
net sales growth, resulting in modest SG&A deleverage (prior
was modest leverage).
- Diluted earnings per share of $0.93 to $1.13 (prior
$0.90 to $1.10).
Conference Call
The Company will hold its first quarter 2022 conference call at
5:00 p.m. ET today. Dial (888) 506-0062 to participate. The call
will also be webcast live on the Investor Relations section of the
Company's website at http://investor.columbia.com.
Second Quarter 2022 Reporting
Date
Columbia Sportswear Company plans to report second quarter 2022
financial results on Wednesday, July 27, 2022 at approximately 4:00
p.m. ET.
Supplemental Financial
Information
Since Columbia Sportswear Company is a global company, the
comparability of its operating results reported in United States
dollars is affected by foreign currency exchange rate fluctuations
because the underlying currencies in which it transacts change in
value over time compared to the United States dollar. To supplement
financial information reported in accordance with GAAP, the Company
discloses constant-currency net sales information, which is a
non-GAAP financial measure, to provide a framework to assess how
the business performed excluding the effects of changes in the
exchange rates used to translate net sales generated in foreign
currencies into United States dollars. The Company calculates
constant-currency net sales by translating net sales in foreign
currencies for the current period into United States dollars at the
average exchange rates that were in effect during the comparable
period of the prior year. Management believes that this non-GAAP
financial measure reflects an additional and useful way of viewing
an aspect of our operations that, when viewed in conjunction with
our GAAP results, provides a more comprehensive understanding of
our business and operations. In particular, investors may find the
non-GAAP financial measure useful by reviewing our net sales
results without the volatility in foreign currency exchange rates.
This non-GAAP financial measure also facilitates management's
internal comparisons to our historical net sales results and
comparisons to competitors' net sales results.
The non-GAAP financial measures should be viewed in addition to,
and not in lieu of or superior to, our financial measures
calculated in accordance with GAAP. The Company provides a
reconciliation of non-GAAP measures to the most directly comparable
financial measure calculated in accordance with GAAP. See the
"Reconciliation of GAAP to Non-GAAP Financial Measures" table
included herein. The non-GAAP financial measures presented may not
be comparable to similarly titled measures reported by other
companies.
Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the federal securities laws, including statements
regarding the Company’s expectations, anticipations or beliefs
about the Company's ability to realize growth opportunities, full
year 2022 net sales, gross margin, SG&A expenses, demand
creation spend, operating income, effective income tax rate, net
income, diluted earnings per share, weighted average diluted shares
outstanding, foreign currency translation, cash flows, and capital
expenditures, and first half 2022 net sales, gross margin, SG&A
expenses and diluted earnings per share. Forward-looking statements
often use words such as "will," "anticipate," "estimate," "expect,"
"should," "may" and other words and terms of similar meaning or
reference future dates. The Company's expectations, beliefs and
projections are expressed in good faith and are believed to have a
reasonable basis; however, each forward-looking statement involves
a number of risks and uncertainties, including those set forth in
this document, those described in the Company's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q under the heading
"Risk Factors," and those that have been or may be described in
other reports filed by the Company, including reports on Form 8-K.
Potential risks and uncertainties include those relating to the
impact of the COVID-19 pandemic on our operations; economic
conditions, including inflationary pressures; supply chain
disruptions, constraints and expenses; labor shortages; changes in
consumer behavior and confidence; as well as geopolitical tensions.
The Company does not undertake any duty to update any of the
forward-looking statements after the date of this document to
conform them to actual results or to reflect changes in events,
circumstances or its expectations. New factors emerge from time to
time and it is not possible for the Company to predict or assess
the effects of all such factors or the extent to which any factor,
or combination of factors, may cause results to differ materially
from those contained in any forward-looking statement.
About Columbia Sportswear
Company
Columbia Sportswear Company connects active people with their
passions through its portfolio of well-known brands, making it a
global leader in outdoor, active and everyday lifestyle apparel,
footwear, accessories, and equipment products. Founded in 1938 in
Portland, Oregon, the Company's brands are sold in approximately 90
countries. In addition to the Columbia® brand, Columbia Sportswear
Company also owns the Mountain Hard Wear®, SOREL® and prAna®
brands. To learn more, please visit the Company's websites at
www.columbia.com, www.mountainhardwear.com, www.sorel.com, and www.prana.com.
COLUMBIA SPORTSWEAR
COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
March 31, 2022
March 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents
$ 435,240
$ 873,641
Short-term investments
175,024
920
Accounts receivable, net
408,186
338,787
Inventories, net
714,415
525,704
Prepaid expenses and other current
assets
105,261
66,173
Total current assets
1,838,126
1,805,225
Property, plant and equipment, net
290,070
300,063
Operating lease right-of-use assets
333,356
363,652
Intangible assets, net
101,496
103,146
Goodwill
68,594
68,594
Deferred income taxes
89,613
86,825
Other non-current assets
66,724
66,401
Total assets
$ 2,787,979
$ 2,793,906
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$ 262,255
$ 165,555
Accrued liabilities
234,326
224,674
Operating lease liabilities
68,136
81,308
Income taxes payable
6,297
3,431
Total current liabilities
571,014
474,968
Non-current operating lease
liabilities
321,250
356,766
Income taxes payable
40,299
50,285
Deferred income taxes
—
4,406
Other long-term liabilities
36,516
38,671
Total liabilities
969,079
925,096
Total shareholders' equity
1,818,900
1,868,810
Total liabilities and shareholders'
equity
$ 2,787,979
$ 2,793,906
COLUMBIA SPORTSWEAR
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March
31,
(In thousands, except per share
amounts)
2022
2021
Net sales
$ 761,510
$ 625,606
Cost of sales
383,063
304,204
Gross profit
378,447
321,402
Gross margin
49.7
%
51.4
%
Selling, general and administrative
expenses
299,086
254,389
Net licensing income
4,305
3,467
Operating income
83,666
70,480
Interest income, net
395
278
Other non-operating income (expense),
net
44
(304
)
Income before income tax
84,105
70,454
Income tax expense
(17,268
)
(14,554
)
Net income
$ 66,837
$ 55,900
Earnings per share:
Basic
$ 1.04
$ 0.84
Diluted
$ 1.03
$ 0.84
Weighted average shares outstanding:
Basic
64,273
66,363
Diluted
64,591
66,885
COLUMBIA SPORTSWEAR
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March
31,
(in thousands)
2022
2021
Cash flows from operating
activities:
Net income
$ 66,837
$ 55,900
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation, amortization, and non-cash
lease expense
30,577
30,459
Provision for uncollectible accounts
receivable
(3,377
)
(7,849
)
Loss on disposal or impairment of
intangible assets, property, plant and equipment, and right-of-use
assets
1,598
131
Deferred income taxes
2,746
4,577
Stock-based compensation
5,503
4,874
Changes in operating assets and
liabilities:
Accounts receivable
81,220
117,818
Inventories, net
(71,108
)
25,117
Prepaid expenses and other current
assets
(17,604
)
(11,150
)
Other assets
(1,443
)
51
Accounts payable
(20,823
)
(41,194
)
Accrued liabilities
(81,371
)
(27,253
)
Income taxes payable
(11,004
)
(19,291
)
Operating lease assets and liabilities
(15,979
)
(21,273
)
Other liabilities
440
(18
)
Net cash provided by (used in) operating
activities
(33,788
)
110,899
Cash flows from investing
activities:
Purchases of short-term investments
(44,877
)
—
Sales and maturities of short-term
investments
984
1,054
Capital expenditures
(12,885
)
(3,896
)
Net cash used in investing activities
(56,778
)
(2,842
)
Cash flows from financing
activities:
Proceeds from credit facilities
—
7,753
Repayments on credit facilities
—
(7,532
)
Proceeds from issuance of common stock
related to stock-based compensation
2,512
13,772
Tax payments related to stock-based
compensation
(3,959
)
(5,358
)
Repurchase of common stock
(217,317
)
(11,223
)
Cash dividends paid
(19,151
)
(17,285
)
Net cash used in financing activities
(237,915
)
(19,873
)
Net effect of exchange rate changes on
cash
317
(5,268
)
Net increase (decrease) in cash and
cash equivalents
(328,164
)
82,916
Cash and cash equivalents, beginning of
period
763,404
790,725
Cash and cash equivalents, end of
period
$ 435,240
$ 873,641
Supplemental disclosures of cash flow
information:
Cash paid during the year for income
taxes
$ 18,205
$ 37,534
Supplemental disclosures of non-cash
investing and financing activities:
Property, plant and equipment acquired
through increase in liabilities
$ 6,702
$ 2,832
COLUMBIA SPORTSWEAR
COMPANY
Reconciliation of GAAP to
Non-GAAP Financial Measures
Net Sales Growth -
Constant-currency Basis
(Unaudited)
Three Months Ended March
31,
Reported
Net Sales
Adjust for Foreign
Currency
Constant-currency
Net Sales
Reported
Net Sales
Reported
Net Sales
Constant-currency
Net Sales
(In millions, except percentage
changes)
2022
Translation
2022(1)
2021
% Change
% Change(1)
Geographical Net Sales:
United States
$ 501.9
$ —
$ 501.9
$ 408.6
23%
23%
Latin America and Asia Pacific
121.7
5.5
127.2
112.0
9%
14%
Europe, Middle East and Africa
94.7
5.7
100.4
70.8
34%
42%
Canada
43.2
0.1
43.3
34.2
26%
27%
Total
$ 761.5
$ 11.3
$ 772.8
$ 625.6
22%
24%
Brand Net Sales:
Columbia
$ 643.8
$ 10.7
$ 654.5
$ 527.4
22%
24%
SOREL
63.6
0.4
64.0
46.3
37%
38%
prAna
32.7
—
32.7
31.5
4%
4%
Mountain Hardwear
21.4
0.2
21.6
20.4
5%
6%
Total
$ 761.5
$ 11.3
$ 772.8
$ 625.6
22%
24%
Product Category Net Sales:
Apparel, Accessories and Equipment
$ 565.9
$ 7.7
$ 573.6
$ 468.9
21%
22%
Footwear
195.6
3.6
199.2
156.7
25%
27%
Total
$ 761.5
$ 11.3
$ 772.8
$ 625.6
22%
24%
Channel Net Sales:
Wholesale
$ 408.2
$ 5.8
$ 414.0
$ 335.4
22%
23%
DTC
353.3
5.5
358.8
290.2
22%
24%
Total
$ 761.5
$ 11.3
$ 772.8
$ 625.6
22%
24%
(1) Constant-currency net sales information is a non-GAAP
financial measure that excludes the effect of changes in foreign
currency exchange rates against the United States dollar between
comparable reporting periods. The Company calculates
constant-currency net sales by translating net sales in foreign
currencies for the current period into United States dollars at the
average exchange rates that were in effect during the comparable
period of the prior year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005891/en/
Andrew Burns, CFA Vice President of Investor Relations and
Strategic Planning Columbia Sportswear Company (503) 985-4112
aburns@columbia.com
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