Perry Ellis International, Inc. (NASDAQ:PERY) today reported
results for the first quarter ended April 30, 2011 (“first quarter
of fiscal 2012”).
First Quarter Operating Results
“We are extremely pleased with our results for the first
quarter. Our ability to successfully capitalize on the positive
momentum for our brands and business from prior year coupled with
the addition of the new Rafaella women’s sportswear business drove
record revenue and net income for Perry Ellis International,”
commented Oscar Feldenkreis, President and COO. “Throughout fiscal
2012 we will continue to invest in and focus on our niche
businesses such as golf and Hispanic as well as in Perry Ellis
Collection, women’s sportswear, direct -to-consumer, and
international where we believe we can further maximize our
operating model and drive significant growth and earnings for our
shareholders,” continued Mr. Feldenkreis.
Total revenues increased 31% to $288.3 million compared to
$220.3 million in the comparable prior year period. For the first
quarter of fiscal 2012 Rafaella contributed $38.9 million in total
revenue. Organic revenue grew 13%, to $249 million, which excludes
the recently acquired Rafaella business. Increases were driven by
strong performance within the golf and Hispanic lifestyle brands,
as well as in Perry Ellis Collection. Furthermore, incremental
growth of $11 million in program business which was
opportunistically driven by forward inventory positions added to
the quarter.
Overall gross profit for the quarter increased 23% to $97.0
million compared to $78.7 million in the comparable prior year
period. Gross margin was 33.6% of total revenues compared to 35.7%
in the comparable prior year period. The Rafaella business,
acquired at the end of January, which has lower gross margins than
the Company’s core businesses, impacted first quarter gross margin
by 110 basis points. Furthermore, as previously noted, incremental
program business and the effect of converting licenses for small
leather goods and dress shirts into wholesale businesses impacted
first quarter gross margin by approximately 100 basis points.
“Our first quarter results demonstrate the successful expansion
of our growth strategies and the addition of Rafaella, which we
believe provide us with a sustained platform for expansion in the
current year and beyond,” stated George Feldenkreis, Chairman and
CEO. “During the quarter this led to a 31% increase in revenue and
a 45% increase in EBITDA with our EBITDA margin rising 120 basis
points to 11.7%. We continue to successfully navigate a challenging
product cost environment and expect to continue our strong sales
and earnings performance given the strength of our products and
business model which is providing us with market share expansion in
existing retail doors as well as creating new opportunities for
growth.”
As reported under generally accepted accounting principles
(“GAAP”) the Company reported a 37% increase in net income
attributed to Perry Ellis International, Inc. of $15.3 million, or
$0.99 per fully diluted share compared to net income attributed to
Perry Ellis International, Inc. of $11.2 million, or $0.81 per
fully diluted share in the comparable prior year period.
Net income attributed to Perry Ellis International, Inc. per
diluted share ("EPS"), as adjusted for the first quarter of fiscal
2012 was $1.08 (see attached reconciliation "Table 1"). Net Income,
as adjusted, excludes the impact of the cost on early
extinguishment of the senior subordinated 2013 notes and duplicated
interest from March 8, 2011 to April 6, 2011 associated with the
interest during the time that the retired debt and the new senior
subordinated 2019 notes were simultaneously outstanding.
Earnings before interest, taxes, depreciation, amortization,
cost on early extinguishment of debt, and non-controlling interest
(“EBITDA”) for the first quarter increased 45% to $33.6 million, or
11.7% of total revenues compared to $23.1 million, or 10.5% of
total revenue for the comparable prior year period (see attached
reconciliation "Table 2"). For the first quarter of fiscal 2012,
Rafaella delivered $5.8 million in EBITDA, significantly
contributing to the 120 basis point improvement in EBITDA margin
for the quarter.
Balance Sheet Update
The Company ended the first quarter of fiscal 2012 with $21.7
million in cash and cash equivalents. In addition, accounts
receivable increased 41% to $182.5 million compared to $129.5
million as of January 29, 2011. The quality of the receivables from
a customer base is very strong and the Company is pleased with the
financial strength of its current partners.
Inventories were $181.7 million at quarter end representing a 2%
increase compared to $178.2 million as of January 29, 2011. The
Company also noted that the opportunistic inventory purchases it
made throughout fiscal 2011 to support ongoing replenishment and
program businesses represented incremental sales growth within the
first quarter of fiscal 2012.
Fiscal 2012 Guidance
The Company reaffirmed its revenue guidance of reaching $1.0
billion for full fiscal year 2012. In addition, core organic growth
is expected to add 8% to 10% from prior fiscal year total revenues,
and the newly acquired Rafaella women’s sportswear business is
expected to add approximately $125.0 million in revenue for full
fiscal year 2012.
Furthermore, total EBITDA for the year is expected to be in a
range of $88 - $90 million with Rafaella contributing $15-$16
million, thereby approaching a 9.0% EBITDA margin for fiscal
2012.
Based on first quarter of fiscal 2012 performance and current
business trends the Company now expects earnings per share,
diluted, for full year fiscal 2012 in a range of $2.40 - $2.50
compared to previous guidance of $2.30 - $2.40.
About Perry Ellis International
Perry Ellis International, Inc. is a leading designer,
distributor and licensor of a broad line of high quality men's and
women's apparel, accessories and fragrances. The Company's
collection of dress and casual shirts, golf sportswear, sweaters,
dress pants, casual pants and shorts, jeans wear, active wear and
men's and women's swimwear is available through all major levels of
retail distribution. The Company, through its wholly owned
subsidiaries, owns a portfolio of nationally and internationally
recognized brands, including: Perry Ellis(R), Jantzen(R), Laundry
by Shelli Segal(R), C&C California(R), Cubavera(R), Centro(R),
Solero(R), Munsingwear(R), Savane(R), Original Penguin(R) by
Munsingwear(R), Grand Slam(R), Natural Issue(R), Pro Player(R),
Havanera Co.(R), Axis(R), Tricots St. Raphael(R), Gotcha(R), Girl
Star(R), MCD(R), John Henry(R), Mondo di Marco(R), Redsand(R),
Manhattan(R), Axist(R), Farah(R) and Rafaella(R). The Company
enhances its roster of brands by licensing trademarks from third
parties, including: Pierre Cardin(R) for men's sportswear, Nike(R)
and Jag(R) for swimwear, and Callaway(R), TOP-FLITE(R), PGA TOUR(R)
and Champions Tour(R) for golf apparel. Additional information on
the Company is available at www.pery.com.
Safe Harbor Statement
We caution readers that the forward-looking statements
(statements which are not historical facts) in this release are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are based on current expectations rather than historical
facts and they are indicated by words or phrases such as
"anticipate," "believe," "budget," "contemplate," "continue,"
"could," "estimate," "expect," "guidance," "indicate," "intend,"
"may," "might," "plan," "possibly," "potential," "predict,"
"probably," "proforma," "project," "seek," "should," "target," or
"will" and similar words or phrases or comparable terminology. We
have based such forward-looking statements on our current
expectations, assumptions, estimates and projections. While we
believe these expectations, assumptions, estimates and projections
are reasonable, such forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
and other factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements, many of which are beyond our control.
These factors include: general economic conditions, a significant
decrease in business from or loss of any of our major customers or
programs, anticipated and unanticipated trends and conditions in
our industry, including the impact of recent or future retail and
wholesale consolidation, recent and future economic conditions,
including turmoil in the financial and credit markets, the
effectiveness of our planned advertising, marketing and promotional
campaigns, our ability to contain costs, disruptions in the supply
chain, our future capital needs and our ability to obtain
financing, our ability to protect our trademarks, our ability to
integrate acquired businesses, trademarks, trade names and
licenses, our ability to predict consumer preferences and changes
in fashion trends and consumer acceptance of both new designs and
newly introduced products, the termination or non-renewal of any
material license agreements to which we are a party, changes in the
costs of raw materials, labor and advertising, our ability to carry
out growth strategies including expansion in international and
direct to consumer retail markets, the level of consumer spending
for apparel and other merchandise, our ability to compete, exposure
to foreign currency risk and interest rate risk, possible
disruption in commercial activities due to terrorist activity and
armed conflict, and other factors set forth in Perry Ellis
International's filings with the Securities and Exchange
Commission. Investors are cautioned that all forward-looking
statements involve risks and uncertainties, including those risks
and uncertainties detailed in Perry Ellis' filings with the SEC.
You are cautioned not to place undue reliance on these
forward-looking statements, which are valid only as of the date
they were made. We undertake no obligation to update or revise any
forward-looking statements to reflect new information or the
occurrence of unanticipated events or otherwise.
PERRY ELLIS INTERNATIONAL, INC. AND
SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED)
(amounts in 000's, except per share information) INCOME
STATEMENT DATA: Three Months Ended
April 30, 2011 May 1, 2010
Revenues Net sales $ 282,775 $ 214,242 Royalty income
5,514 6,107 Total revenues 288,289 220,349 Cost of sales
191,319 141,605 Gross profit 96,970 78,744 Operating
expenses Selling, general and administrative expenses 63,375 55,626
Depreciation and amortization 3,189 3,119 Total
operating expenses 66,564 58,745 Operating income
30,406 19,999 Cost on early extinguishment of debt 1,306 - Interest
expense 4,666 3,747 Net income before income
taxes 24,434 16,252 Income tax provision 9,056 4,876
Net income 15,378 11,376 Less: net income attributed to
noncontrolling interest - 177 Net income attributed
to Perry Ellis International, Inc. $ 15,378 $ 11,199 Net
income attributed to Perry Ellis International, Inc. per share
Basic $ 1.07 $ 0.87 Diluted $ 0.99 $ 0.81 Weighted average
number of shares outstanding Basic 14,421 12,867 Diluted 15,538
13,884
PERRY ELLIS INTERNATIONAL, INC. AND
SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED)
(amounts in 000's)
BALANCE SHEET DATA: As of April 30, 2011 January 29,
2011
Assets Current assets: Cash and cash
equivalents $ 21,728 $ 18,524 Accounts receivable, net 182,474
129,534 Inventories 181,741 178,217 Other current assets
29,215 36,785 Total current assets 415,158
363,060 Property and equipment, net 54,377 55,077 Intangible
assets 260,131 262,647 Other assets 7,734 4,946
Total assets $ 737,400 $ 685,730
Liabilities and
stockholders' equity Current liabilities: Accounts
payable $ 80,155 $ 73,890 Accrued expenses and other liabilities
24,176 30,650 Senior credit facility 32,514 - Accrued interest
payable 2,075 3,744 Unearned revenues 4,655 4,438
Total current liabilities 143,575 112,722
Long term liabilities: Senior subordinated notes
payable, net 150,000 105,221 Senior credit facility - 97,342 Real
estate mortgages 25,553 25,793 Deferred pension obligation 12,725
13,120 Unearned revenues and other long term liabilities
31,187 28,592 Total long term liabilities 219,465
270,068 Total liabilities 363,040
382,790
Equity Total equity
374,360 302,940 Total liabilities and equity $
737,400 $ 685,730
PERRY ELLIS INTERNATIONAL, INC. AND
SUBSIDIARIES Table 1 Reconciliation of first quarter
fiscal 2012 and 2011 earnings per share to adjusted earnings per
share. (UNAUDITED) (amounts in 000's)
Three Months Ended April 30, 2011 May 1,
2010 Net income attributed to Perry Ellis International, Inc. $
15,378 $ 11,199 Plus: Cost on early extinguishment of debt 1,306 -
Duplicate interest from March 8 to April 6, 2011 745 - Less: Tax
benefit (718 ) - Net income attributed to Perry Ellis
International, Inc., as adjusted $ 16,711 $ 11,199
Three Months Ended April 30, 2011 May 1,
2010 Net income attributed to Perry Ellis International, Inc.
per share, diluted $ 0.99 $ 0.81 Plus: Net per share cost on early
extinguishment of debt $ 0.06 $ - Net per share duplicate interest
from March 8 to April 6, 2011 $ 0.03 $ - Net income attributed to
Perry Ellis International, Inc., as adjusted, per share, diluted $
1.08 $ 0.81
"Adjusted net income attributed to Perry
Ellis International Inc. per share, diluted" consists of "net
income attributed to Perry Ellis International Inc. per share,
diluted" adjusted for the impact of the cost on early
extinguishment of debt and the duplicate interest from March 8,
2011 to April 6, 2011 associated with the interest during the time
that the retired debt and the new debt were simultaneously
outstanding. These costs are not indicative of our ongoing
operations and thus to get a more comparable result with the
operating performance of the apparel industry, they have been
removed, net of taxes, from the calculation.
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
Table 2 RECONCILIATION OF NET INCOME TO EBITDA(1)
(UNAUDITED) (amounts in 000's) Three Months
Ended April 30, 2011 May 1, 2010
Net income attributed to Perry Ellis International, Inc. $ 15,378 $
11,199 Plus: Depreciation and amortization 3,189 3,119 Interest
expense 4,666 3,747 Net income attributable to noncontrolling
interest - 177 Cost on early extinguishment of debt 1,306 - Income
tax provision 9,056 4,876 EBITDA $
33,595 $ 23,118 Gross profit $ 96,970 $ 78,744
Less: Selling, general and administrative expenses (63,375 )
(55,626 ) EBITDA 33,595 23,118
Total revenues $ 288,289 $ 220,349 EBITDA
margin percentage of revenues 11.7 % 10.5 % (1)
EBITDA consists of earnings before interest, taxes, depreciation,
amortization, cost on early extinguishment of debt, and
noncontrolling interest. EBITDA is not a measurement of financial
performance under accounting principles generally accepted in the
United States of America, and does not represent cash flow from
operations. EBITDA is presented solely as a supplemental disclosure
because management believes that it is a common measure of
operating performance in the apparel industry.
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