— Net Sales Increase 16% to First Quarter
Record of $612 million —
— G-III Increases Full-Year Net Sales and
Net Income Guidance —
G-III Apparel Group, Ltd. (NasdaqGS:GIII) today announced
operating results for the first quarter of fiscal 2019 that ended
April 30, 2018.
Net sales for the first quarter of fiscal 2019 increased 16% to
a first quarter record of $611.7 million compared to $529.0 million
in the year-ago period. The Company reported net income for the
first quarter of $9.9 million, or $0.20 per diluted share, compared
to a net loss of $10.4 million, or $(0.21) per share, in the prior
year’s comparable period.
Non-GAAP net income per diluted share was $0.22 for the first
quarter of this year compared to a non-GAAP net loss of $(0.18) per
share in the same period last year. Non-GAAP net income per diluted
share and net loss per share excludes (i) non-cash imputed interest
expense related to the note issued to seller as part of the
consideration for the acquisition of Donna Karan International
(“DKI”) of $1.2 million in this quarter compared to $1.4 million in
first quarter last year and (ii) professional fees related to the
acquisition of DKI of $1.1 million in the first quarter of last
year. The aggregate effect of these exclusions was equal to $0.02
per diluted share in the first quarter this year and $0.03 per
diluted share in the first quarter last year.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “We are pleased to have begun the year with a solid quarter
across the board. Strong brands, quality product, diversified
distribution and great execution continue to be our winning
formula. We are excited to see the momentum continue and have
increased confidence in our outlook for the remainder of this year.
We believe our long-term growth opportunities have never been more
compelling and we remain focused on capturing market share, driving
growth, improving profitability and creating exceptional value for
our shareholders.”
Outlook
The Company today increased its prior guidance for the full
fiscal year 2019 ending January 31, 2019. The Company now expects
net sales of approximately $2.97 billion and net income between
$112 million and $117 million, or between $2.20 and $2.30 per
diluted share, for fiscal 2019. The Company previously forecasted
net sales of approximately $2.94 billion and net income between $97
million and $102 million, or between $1.90 and $2.00 per diluted
share, for fiscal 2019.
The Company is anticipating non-GAAP net income for fiscal 2019
between $116 million and $121 million, or between $2.27 and $2.37
per diluted share compared to our previous guidance of non-GAAP net
income for fiscal year 2019 between $101 million and $106 million,
or between $1.98 and $2.08 per diluted share. Non-GAAP guidance
excludes non-cash imputed interest expense of approximately $5.0
million, or $0.07 per diluted share, related to the note issued to
the seller as part of the consideration for the DKI
acquisition.
The Company is projecting full-year adjusted EBITDA for fiscal
2019 between $236 million and $246 million compared to its previous
forecast of adjusted EBITDA between $218 million and $227
million.
For the second quarter of fiscal 2019 ending July 31, 2018, the
Company is forecasting net sales of approximately $590 million and
net income or loss between a net loss of $3.5 million and net
income of $1.5 million, or between a net loss of $(0.07) per share
and net income of $0.03 per diluted share. This forecast compares
to net sales of $538.0 million and a net loss of $8.6 million, or
($0.18) per share, reported for the second quarter of fiscal
2018.
The second quarter forecast includes non-cash imputed interest
expense of $1.2 million related to the note issued to the seller as
part of the consideration for the DKI acquisition. On an adjusted
basis, excluding imputed interest expense, the Company is
forecasting a second quarter non-GAAP net income or loss between a
net loss of $2.6 million and net income of $2.4 million, or between
a net loss of $(0.05) per share and net income of $0.05 per diluted
share.
Non-GAAP Financial Measures
Reconciliations of GAAP net income or net loss per share to
non-GAAP net income or net loss per share and of GAAP net income to
adjusted EBITDA are presented in tables accompanying the condensed
financial statements included in this release and provide useful
information to evaluate the Company’s operational performance.
Non-GAAP net income or net loss per share and adjusted EBITDA
should be evaluated in light of the Company’s financial statements
prepared in accordance with GAAP.
About G-III Apparel Group,
Ltd.
G-III is a leading manufacturer and distributor of apparel and
accessories under licensed brands, owned brands and private label
brands. G-III’s owned brands include Donna Karan, DKNY,
Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and
Jessica Howard. G-III has fashion licenses under the Calvin Klein,
Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan,
Guess?, Vince Camuto, Ivanka Trump, Kensie, Levi's and Dockers
brands. Through our team sports business, G-III has licenses with
the National Football League, National Basketball Association,
Major League Baseball, National Hockey League, and over 150 U.S.
colleges and universities. G-III also operates retail stores under
the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Calvin Klein
Performance and Karl Lagerfeld Paris names.
Statements concerning G-III's business outlook or future
economic performance, anticipated revenues, expenses or other
financial items; product introductions and plans and objectives
related thereto; and statements concerning assumptions made or
expectations as to any future events, conditions, performance or
other matters are "forward-looking statements" as that term is
defined under the Federal Securities laws. Forward-looking
statements are subject to risks, uncertainties and factors which
include, but are not limited to, reliance on licensed product,
reliance on foreign manufacturers, risks of doing business abroad,
the current economic and credit environment, the nature of the
apparel industry, including changing customer demand and tastes,
customer concentration, seasonality, risks of operating a retail
business, customer acceptance of new products, the impact of
competitive products and pricing, dependence on existing
management, possible disruption from acquisitions, risks relating
to G-III’s operations of the Donna Karan International Inc.
business and general economic conditions, as well as other risks
detailed in G-III's filings with the Securities and Exchange
Commission. G-III assumes no obligation to update the information
in this release.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
(NASDAQ: GIII) CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (LOSS) (In thousands, except per share amounts)
Three Months Ended April 30, 2018
2017 (Unaudited) Net sales $ 611,743 $ 529,042 Cost
of goods sold 376,306 327,326 Gross
profit 235,437 201,716 Selling, general and administrative
expenses 202,981 197,411 Depreciation and amortization 9,380
9,838 Operating profit (loss) 23,076 (5,533 )
Other loss (451 ) (1,232 ) Interest and financing charges,
net (9,620 ) (9,729 ) Income (loss) before income
taxes 13,005 (16,494 ) Income tax expense (benefit)
3,120 (6,103 ) Net income (loss) $ 9,885 $
(10,391 ) Net income (loss) per common share: Basic $ 0.20
$ (0.21 ) Diluted $ 0.20 $ (0.21 ) Weighted
average shares outstanding: Basic 49,127
48,648 Diluted 50,137 48,648
Selected Balance Sheet Data (in
thousands): At April 30, 2018 2017
(Unaudited) Cash and cash equivalents $ 71,048 $ 67,134
Working capital 613,201 601,916 Inventories 502,819 445,969 Total
Assets 2,044,472 1,803,788 Long-term debt 448,263 492,796 Total
Stockholders' Equity 1,081,860 1,016,060
G-III
APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP
NET INCOME (LOSS) PER SHARE TO NON-GAAP NET INCOME (LOSS)
PER SHARE Three Months Ended April
30, 2018 2017 (Unaudited) GAAP diluted net
income (loss) per common share $ 0.20 $ (0.21 ) Excluded from
non-GAAP: Professional fees associated with the DKI acquisition -
0.02 Non-cash imputed interest 0.02 0.03 Income tax benefit impact
on non-GAAP adjustments - (0.02 ) Non-GAAP diluted
net income (loss) per common share, as defined $ 0.22 $ (0.18 )
Non-GAAP diluted net income (loss) per common share is a
“non-GAAP financial measure” that excludes professional fees and
non-cash imputed interest expense in connection with the
acquisition of DKI. Income tax impacts of non-GAAP adjustments are
calculated using the effective tax rates for the respective
periods, exclusive of the one-time charges. Management believes
that this non-GAAP financial measure provides meaningful
supplemental information regarding our performance by excluding
items that are not indicative of our core business operating
results. Management uses this non-GAAP financial measure to assess
our performance on a comparative basis and believes that it is also
useful to investors to enable them to assess our performance on a
comparative basis across historical periods and facilitate
comparisons of our operating results to those of our competitors.
The presentation of this financial information is not intended to
be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with
GAAP.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME TO
FORECASTED AND ACTUAL ADJUSTED EBITDA (In thousands)
ForecastedTwelve Months
Ending
ActualTwelve Months
Ended
January 31, 2019 January 31, 2018 (Unaudited)
Net income $ 112,000 - 117,000 $ 62,124 Professional fees
associated with the DKI acquisition - 736 Acquisition related
transition expenses - 1,314 Asset impairment charges - 7,884
Depreciation and amortization 38,000 37,783 Interest and financing
charges, net 47,000 43,488 Income tax expense 39,000 -
44,000 47,925 Adjusted EBITDA, as defined $ 236,000 -
246,000 $ 201,254
Adjusted EBITDA is a “non-GAAP financial measure” which
represents earnings before depreciation and amortization, interest
and financing charges, net, and income tax expense and excludes
professional fees and DKI related transition expenses, which are
comprised primarily of severance expenses, and asset impairments
primarily related to leasehold improvements and furniture and
fixtures at certain of our retail stores. Adjusted EBITDA is being
presented as a supplemental disclosure because management believes
that it is a common measure of operating performance in the apparel
industry. Adjusted EBITDA should not be construed as an alternative
to net income, as an indicator of the Company’s operating
performance, or as an alternative to cash flows from operating
activities as a measure of the Company’s liquidity, as determined
in accordance with GAAP.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME (LOSS) TO
NON-GAAP NET INCOME (LOSS) (In thousands)
Forecasted ThreeMonths
Ending
Actual Three Months
Ended
Forecasted TwelveMonths
Ending
Actual Twelve Months
Ended
July 31, 2018 July 31, 2017 January 31, 2019
January 31, 2018 (Unaudited) Net income (loss) $
(3,500) - 1,500 $ (8,568) $ 112,000 - 117,000 $ 62,124 Excluded
from non-GAAP: Professional fees associated with the DKI
acquisition - 699 - 736 Non-cash imputed interest 1,200 1,428 5,000
5,714 Acquisition related transition expenses - - - 1,314 Asset
impairment charges - - - 7,884 Tax Cuts and Jobs Act enactment - -
- 7,477 Income tax benefit impact on non-GAAP adjustments
(300) (760) (1,000) (5,871) Non-GAAP Net
income (loss), as defined $ (2,600) - 2,400 $ (7,201) $ 116,000 -
121,000 $ 79,378
Non-GAAP Net income (loss) is a “non-GAAP financial measure”
that excludes (i) professional fees, non-cash imputed interest
expense and DKI transition expenses, which are comprised primarily
of severance expenses, in connection with the acquisition of DKI,
(ii) asset impairments primarily related to leasehold improvements
and furniture and fixtures at certain of our retail stores and
(iii) income tax charges related to the one-time effect of the
enactment of the Tax Cut and Jobs Act. These income tax charges
primarily relate to reduction of deferred tax assets and taxes due
on foreign earnings. Income tax impacts of non-GAAP adjustments are
calculated using the effective tax rates for the respective
periods, exclusive of the one-time charges. Management believes
that this non-GAAP financial measure provides meaningful
supplemental information regarding our performance by excluding
items that are not indicative of our core business operating
results. Management uses this non-GAAP financial measure to assess
our performance on a comparative basis and believes that it is also
useful to investors to enable them to assess our performance on a
comparative basis across historical periods and facilitate
comparisons of our operating results to those of our competitors.
The presentation of this financial information is not intended to
be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with
GAAP.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME (LOSS) PER
SHARE TO FORECASTED AND ACTUAL NON-GAAP NET INCOME (LOSS)
PER SHARE
Forecasted ThreeMonths
Ending
Actual Three Months
Ended
Forecasted TwelveMonths
Ending
Actual Twelve Months
Ended
July 31, 2018 July 31, 2017 January 31, 2019
January 31, 2018 (Unaudited) GAAP diluted net income
(loss) per common share $ (0.07) - 0.03 $ (0.18) $ 2.20 - 2.30 $
1.25 Excluded from non-GAAP: Professional fees associated with the
DKI acquisition - 0.01 - 0.01 Non-cash imputed interest 0.03 0.03
0.10 0.12 Acquisition related transition expenses - - - 0.03 Asset
impairment charges - - - 0.16 Tax Cuts and Jobs Act enactment - - -
0.15 Income tax benefit impact on non-GAAP adjustments
(0.01) (0.01) (0.03) (0.12) Non-GAAP diluted
net income (loss) per common share, as defined $ (0.05) - 0.05 $
(0.15) $ 2.27 - 2.37 $ 1.60
Non-GAAP diluted net income (loss) per common share is a
“non-GAAP financial measure” that excludes (i) professional fees,
non-cash imputed interest expense and DKI related transition
expenses, which are comprised primarily of severance expenses, in
connection with the acquisition of DKI, (ii) asset impairments
primarily related to leasehold improvements and furniture and
fixtures at certain of our retail stores and (iii) income tax
charges related to the one-time effect of the enactment of the Tax
Cut and Jobs Act. These income tax charges primarily relate to
reduction of deferred tax assets and taxes due on foreign earnings.
Income tax impacts of non-GAAP adjustments are calculated using the
effective tax rates for the respective periods, exclusive of the
one-time charges. Management believes that this non-GAAP financial
measure provides meaningful supplemental information regarding our
performance by excluding items that are not indicative of our core
business operating results. Management uses this non-GAAP financial
measure to assess our performance on a comparative basis and
believes that it is also useful to investors to enable them to
assess our performance on a comparative basis across historical
periods and facilitate comparisons of our operating results to
those of our competitors. The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
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version on businesswire.com: https://www.businesswire.com/news/home/20180605005474/en/
Company:G-III Apparel Group, Ltd.Priya Trivedi,
646-473-5157V.P. Investor Relations & TreasurerorInvestor
Relations:ICR, Inc.Tom Filandro, 646-277-1235Managing
Director
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