— Net Sales Increase to a Third Quarter
Record of $1.07 Billion —
— Third Quarter Net Income and Net Income
Per Share Exceed Guidance —
— Raises Full-Year Guidance —
G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced
operating results for the third quarter of fiscal 2019 ended
October 31, 2018.
For the third quarter ended October 31, 2018, G-III reported
that net sales increased 4.7% to $1.07 billion from $1.02 billion
in the year-ago period. The Company reported net income for the
third quarter of $94.0 million, or $1.86 per diluted share, from
$81.6 million, or $1.65 per diluted share, in the prior year’s
comparable period.
Non-GAAP net income per diluted share was $1.88 for the third
quarter of this year compared to $1.67 per share in the same period
last year. Non-GAAP net income per diluted share excludes non-cash
imputed interest expense related to the note issued to the seller
as part of the consideration for the acquisition of Donna Karan
International (“DKI”) of $1.2 million in this quarter and $1.4
million in the third quarter of last year.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “In our largest shipping quarter, the continued momentum in
our wholesale business enabled us to surpass our third quarter
earnings guidance. We again demonstrated great ability to
successfully leverage our five global power brands. Our products
are set-up well across our channels of distribution for the
important holiday season and we believe we will have a strong
finish to the year.”
Outlook
The Company today raised its guidance for the full fiscal year
ending January 31, 2019. The Company expects net sales of
approximately $3.08 billion and net income between $132 million and
$137 million, or between $2.59 and $2.69 per diluted share. The
Company previously forecasted net sales of approximately $3.06
billion and net income between $125 million and $130 million, or
between $2.45 and $2.55 per diluted share, for fiscal 2019. This
compares to net sales of $2.81 billion and net income of $62.1
million, or $1.25 per diluted share, for fiscal 2018.
The Company is anticipating non-GAAP net income for fiscal 2019
between $136 million and $141 million, or between $2.67 and $2.77
per diluted share, compared to our previous guidance of non-GAAP
net income for fiscal 2019 between $129 million and $134 million,
or between $2.52 and $2.62 per diluted share. Non-GAAP results for
fiscal 2019 exclude non-cash imputed interest expense of
approximately $5.0 million, or $0.08 per diluted share, related to
the note issued to the seller as part of the consideration for the
DKI acquisition. This guidance compares to non-GAAP net income of
$79.5 million, or $1.60 per diluted share, for fiscal 2018.
Non-GAAP results for fiscal 2018 exclude (i) non-cash imputed
interest expense related to the note issued to the seller as part
of the consideration for the acquisition of DKI of $5.7 million,
(ii) transitional expenses related to the acquisition of DKI of
$2.1 million, (iii) asset impairments primarily related to
leasehold improvements and furniture and fixtures at certain of our
retail stores of $7.9 million and (iv) income tax charges of $7.5
million related to the one-time effect of the enactment of the Tax
Cuts and Jobs Act. The aggregate effect of these exclusions in
fiscal 2018 was equal to $0.35 per diluted share.
The Company is projecting full-year adjusted EBITDA for fiscal
2019 between $262 million and $269 million compared to its previous
forecast of adjusted EBITDA between $250 million and $260 million.
This compares to full-year adjusted EBITDA of $201.3 million in
fiscal 2018.
Non-GAAP Financial
Measures
Reconciliations of GAAP net income per share to non-GAAP net
income per share and of GAAP net income to adjusted EBITDA are
presented in tables accompanying the condensed consolidated
financial statements included in this release and provide useful
information to evaluate the Company’s operational performance.
Non-GAAP net income 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 designs, sources and markets apparel and accessories under
owned, licensed and private label brands. G-III’s owned brands
include DKNY, Donna Karan, 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, 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,
Karl Lagerfeld Paris and Calvin Klein Performance 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 Donna Karan International Inc., the impact
on our business of the imposition of tariffs by the United States
government and 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
(In thousands, except per share
amounts)
Three Months Ended October 31,
Nine Months Ended October 31, 2018
2017 2018 2017 (Unaudited) (Unaudited)
Net sales $ 1,072,982 $ 1,024,993 $ 2,309,423 $ 2,092,040
Cost of goods sold 690,882 633,897 1,461,252
1,296,239 Gross profit 382,100 391,096 848,171 795,801
Selling, general and administrative expenses 232,052 242,740
632,983 636,000 Depreciation and amortization 10,033
6,906 28,868 27,480 Operating profit 140,015 141,450
186,320 132,321 Other income (loss) 176 (2,072) (303)
(2,935)
Interest and financing charges, net (12,323) (11,431)
(32,153) (31,266) Income before income taxes 127,868
127,947 153,864 98,120 Income tax expense 33,843
46,322 39,877 35,454 Net income $ 94,025 $
81,625 $ 113,987 $ 62,666 Net income per common share: Basic
$ 1.91 $ 1.67 $ 2.32 $ 1.29 Diluted $ 1.86 $ 1.65 $ 2.26 $ 1.27
Weighted average shares outstanding: Basic 49,231
48,846 49,176 48,729 Diluted 50,494
49,528 50,345 49,410
Selected
Balance Sheet Data (in thousands): At October 31,
2018 2017 (Unaudited) Cash and cash
equivalents $ 66,080 $ 68,229 Working capital 961,513 928,371
Inventories 616,162 592,822 Total Assets 2,551,068 2,259,053
Long-term debt 694,277 726,608 Total Stockholders' Equity 1,180,955
1,106,932
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME PER SHARE TO NON-GAAP
NET INCOME PER SHARE Three Months Ended
Nine Months Ended October 31, October
31, 2018 2017 2018
2017 (Unaudited) GAAP diluted net income per common
share $ 1.86 $ 1.65 $ 2.26 $ 1.27 Excluded from non-GAAP:
Non-cash imputed interest 0.03 0.03 0.08 0.09
Transitional expenses associated with
theDKI acquisition
—
—
—
0.04 Income tax impact of non-GAAP adjustments (0.01) (0.01) (0.02)
(0.05)
Non-GAAP diluted net income per
commonshare, as defined
$ 1.88 $ 1.67 $ 2.32 $ 1.35
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes non-cash imputed interest expense
and, for the nine months ended October 31, 2017, also excludes
transitional expenses associated with the DKI acquisition. Income
tax impacts of non-GAAP adjustments are calculated using the
effective tax rates for the respective periods. 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)
Forecasted Twelve Months Ending
Actual Twelve Months Ended January 31, 2019
January 31, 2018 (Unaudited) Net income $ 132,000 -
137,000 $ 62,124
Transitional expenses associated with
theDKI acquisition
— 2,050 Asset impairment charges — 7,884 Depreciation and
amortization 39,000 37,783 Interest and financing charges, net
45,000 43,488 Income tax expense 46,000 - 48,000 47,925
Adjusted EBITDA, as defined $ 262,000 -
269,000 $ 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, for fiscal
2018, also excludes transitional expenses associated with the DKI
acquisition and asset impairment charges 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 TO NON-GAAP
NET INCOME
(In thousands)
Forecasted Twelve Actual Twelve
Months Ended Months Ended January 31, 2019
January 31, 2018 (Unaudited) Net income $ 132,000 -
137,000 $ 62,124 Excluded from non-GAAP:
Transitional expenses associated with
theDKI acquisition
— 2,050 Non-cash imputed interest 5,000 5,714 Asset impairment
charges —
7,884 Tax Cuts and Jobs Act enactment — 7,477 Income tax impact of
non-GAAP adjustments (1,000) (5,871)
Non-GAAP net income, as defined $ 136,000 - 141,000 $ 79,378
Non-GAAP net income is a “non-GAAP financial measure” that
excludes non-cash imputed interest and, in fiscal 2018, also
excludes (i) transitional expenses associated with the DKI
acquisition, (ii) asset impairment charges 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 Cuts 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 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 PER SHARE
TO FORECASTED AND ACTUAL NON-GAAP NET INCOME PER SHARE
Forecasted TwelveMonths
EndedJanuary 31, 2019
Actual TwelveMonths
EndedJanuary 31, 2018
(Unaudited) GAAP diluted net income per common share $ 2.59
- 2.69 $ 1.25 Excluded from non-GAAP:
Transitional expenses associated with
theDKI acquisition
— 0.04 Non-cash imputed interest 0.10 0.12 Asset impairment charges
—
0.16
Tax Cuts and Jobs Act enactment — 0.15 Income tax impact of
non-GAAP adjustments
(0.02)
(0.12)
Non-GAAP diluted net income per
commonshare, as defined
$ 2.67 - 2.77 $ 1.60
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes non-cash imputed interest and, in
fiscal 2018, also excludes (i) transitional expenses associated
with the DKI acquisition, (ii) asset impairment charges 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 Cuts 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 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/20181206005133/en/
G-III Apparel Group, Ltd.Company:Priya TrivediVP
of Investor Relations and Treasurer646-473-5157
Investor Relations:Tom FilandroICR, Inc.646-277-1235
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