GOLETA, Calif., Jan. 31,
2019 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader
in designing, marketing and distributing innovative footwear,
apparel and accessories, today announced financial results for the
third fiscal quarter ended December 31,
2018. The Company also provided its financial outlook for
the fourth fiscal quarter ending March 31,
2019 and updated its outlook for the full fiscal year ending
March 31, 2019.
Throughout this release, references to Non-GAAP financial
measures exclude the impact of certain charges relating to retail
store closures, tax reform, organizational changes and other
one-time or non-recurring amounts. Additional information
regarding these Non-GAAP financial measures is set forth under the
heading "Non-GAAP Financial Measures" below.
"With third quarter results delivered and an updated outlook for
the full fiscal year 2019, I am pleased to say that we are now
well ahead of schedule to deliver on the long term strategic goals
we laid out two years ago," said Dave
Powers, President and Chief Executive Officer. "Our third
quarter results were propelled by the UGG brand as it successfully
delivered a compelling product offering, with thoughtful and
controlled distribution. In addition, we achieved impressive growth
with our HOKA ONE ONE and Koolaburra brands. These brands
significantly contributed to the growth of our business and further
highlight the momentum built throughout the
entire Deckers organization."
"In light of our strong results and the confidence in our
strategies to produce strong cash flow over time, the Board of
Directors has authorized an additional $261
million to our share repurchase program. Combined with the
$89 million remaining under our
current authorization, we now have the ability to repurchase a
total of $350 million worth of shares
in the future, as one avenue to effectively return value to
shareholders."
Third Quarter Fiscal 2019 Financial Review
- Net sales increased 7.8% to $873.8 million compared to $810.5 million for the same period last year. On
a constant currency basis, net sales increased 7.7%.
- Gross margin was 53.8% compared to 52.2% for the same
period last year.
- SG&A expenses were $225.4
million compared to $230.3
million for the same period last year.
Non-GAAP SG&A expenses were $227.8
million this year compared to $220.4
million last year.
- Operating income was $244.7
million compared to $193.2
million for the same period last year.
Non-GAAP operating income was $242.3
million this year compared to $203.1
million last year.
- Diluted earnings per share was $6.68 compared to $2.69 for the same period last year.
Non-GAAP diluted earnings per share was $6.59 this year compared to $4.97 last year.
Brand Summary
- UGG® brand net sales for the third quarter increased 3.6% to
$761.0 million compared to
$734.7 million for the same period
last year.
- HOKA ONE ONE® brand net sales for the third quarter increased
79.2% to $56.9 million compared to
$31.8 million for the same period
last year.
- Teva® brand net sales for the third quarter increased 17.5% to
$22.9 million compared to
$19.5 million for the same period
last year.
- Sanuk® brand net sales for the third quarter decreased 7.0% to
$12.9 million compared to
$13.9 million for the same period
last year.
Channel Summary (included in the brand sales numbers
above)
- Wholesale net sales for the third quarter increased 12.5% to
$482.2 million compared to
$428.8 million for the same period
last year.
- DTC net sales for the third quarter increased 2.6% to
$391.6 million compared to
$381.7 million for the same period
last year. DTC comparable sales for the third quarter increased
1.4% over the same period last year.
Geographic Summary (included in the brand and channel sales
numbers above)
- Domestic net sales for the third quarter increased 14.2% to
$573.0 million compared to
$501.7 million for the same period
last year.
- International net sales for the third quarter decreased 2.6% to
$300.8 million compared to
$308.8 million for the same period
last year.
Balance Sheet (December 31,
2018 as compared to December 31,
2017)
- Cash and cash equivalents were $515.9
million compared to $493.0
million.
- Inventories were $342.0 million
compared to $396.3 million.
- Outstanding borrowings were $31.7
million compared to $32.2
million.
Stock Repurchase Program
During the third quarter, the
Company repurchased approximately 249 thousand shares of
its common stock for a total of $27
million. As of December 31, 2018, the Company had
$89 million remaining under
its $400 million in stock
repurchase authorizations.
As of January 29, 2019, the Board
of Directors approved an increase of $261
million to the Company's stock repurchase authorization.
Combined with the previous outstanding amount of $89 million, this brings the Company's total
stock repurchase authorization up to $350
million.
Full Year Fiscal 2019 Outlook for the Twelve Month Period
Ending March 31, 2019
- Net sales are now expected to be in the range of $1.986 billion to $2.0
billion.
- Gross margin is now expected to be above 50.5%.
- SG&A expenses as a percentage of sales are now projected to
be below 36.5%.
- Operating margin is now expected to be in the range of 14.5% to
14.7%.
- Effective tax rate is now expected to be approximately
20%.
- Non-GAAP diluted earnings per share are now expected to be in
the range of $7.85 to $7.95.
- The earnings per share guidance excludes any charges that may
occur from additional store closures, tax reform, organizational
changes and other one-time or non-recurring amounts. It also does
not assume any impact from additional share repurchases.
Fourth Quarter Fiscal 2019 Outlook for the Three Month Period
Ending March 31, 2019
- Net sales are expected to be in the range of $360.0 million to $374.0
million.
- Non-GAAP diluted earnings per share are expected to be in the
range of break-even to $0.10.
- The earnings per share guidance excludes any charges that may
occur from additional store closures, tax reform, organizational
changes and other one-time or non-recurring amounts. It also does
not assume any impact from additional share repurchases.
Non-GAAP Financial Measures
We present certain Non-GAAP financial measures in this press
release, including constant currency, Non-GAAP SG&A expenses,
Non-GAAP operating income and Non-GAAP diluted earnings (loss) per
share, to provide information that may assist investors in
understanding our financial results and assessing our prospects for
future performance. We believe these Non-GAAP financial
measures are important indicators of our operating performance
because they exclude items that are unrelated to, and may not be
indicative of, our core operating results, such as charges relating
to retail store closures, tax reform, organizational changes and
other one-time or non-recurring amounts. In particular, we
believe the exclusion of certain costs and one-time amounts allows
for a more meaningful comparison of our results from period to
period. Further, we report comparable DTC sales on a constant
currency basis for DTC operations that were open throughout the
current and prior reporting periods, and we adjust prior reporting
periods to conform to current year accounting policies.
These Non-GAAP measures, as we calculate them, may not
necessarily be comparable to similarly titled measures of other
companies and may not be appropriate measures for comparing the
performance of other companies relative to Deckers. For
example, in order to calculate our constant currency information,
we calculate the current period financial information using the
foreign currency exchange rates that were in effect during the
previous comparable period, excluding the effects of foreign
currency exchange rate hedges and re-measurements in the condensed
consolidated balance sheets. These Non-GAAP financial results
are not intended to represent, and should not be considered to be
more meaningful measures than, or alternatives to, measures of
operating performance as determined in accordance with GAAP.
To the extent we utilize such Non-GAAP financial measures in the
future, we expect to calculate them using a consistent method from
period to period. A reconciliation of each of the Non-GAAP
financial measures to the most directly comparable GAAP measures
has been provided under the heading "Reconciliation of GAAP
Financial Measures to Non-GAAP Financial Measures" in the financial
statement tables attached to this press release.
Conference Call Information
The Company's conference call to review the results for the
third quarter fiscal 2019 will be broadcast live today, Thursday,
January 31, 2019 at 4:30 pm Eastern
Time and hosted at www.deckers.com. You
can access the broadcast by clicking on the "Investor" tab and then
clicking on the microphone icon at the top of the page.
About Deckers Brands
Deckers Brands is a global leader in designing, marketing and
distributing innovative footwear, apparel and accessories developed
for both everyday casual lifestyle use and high performance
activities. The Company's portfolio of brands includes UGG®,
Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®. Deckers Brands
products are sold in more than 50 countries and territories through
select department and specialty stores, Company-owned and operated
retail stores, and select online stores, including Company-owned
websites. Deckers Brands has over 40 years of history building
niche footwear brands into lifestyle market leaders attracting
millions of loyal consumers globally. For more information,
please visit www.deckers.com.
Forward Looking Statements
This press release contains "forward-looking statements" within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995, which statements are
subject to considerable risks and uncertainties.
Forward-looking statements include all statements other than
statements of historical fact contained in this press release,
including statements regarding our anticipated financial
performance, including our projected net sales, margins, expenses,
effective tax rate and earnings (loss) per share, as well as
statements regarding our progress towards the achievement of our
long term strategic objectives, our ability to compete in our
industry, our product and brand positioning and strategies, and our
potential repurchase of shares. We have attempted to identify
forward-looking statements by using words such as "anticipate,"
"believe," "could," "estimate," "expected," "intend," "may,"
"plan," "predict," "project," "should," "will," or "would," and
similar expressions or the negative of these expressions.
Forward-looking statements represent our management's current
expectations and predictions about trends affecting our business
and industry and are based on information available as of the time
such statements are made. Although we do not make forward-looking
statements unless we believe we have a reasonable basis for doing
so, we cannot guarantee their accuracy or completeness.
Forward-looking statements involve numerous known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements predicted,
assumed or implied by the forward-looking statements. Some of
the risks and uncertainties that may cause our actual results to
materially differ from those expressed or implied by these
forward-looking statements are described in the section entitled
"Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2018, as well as
in our Quarterly Reports on Form 10-Q and other filings with the
Securities and Exchange Commission.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. Except as required by
applicable law or the listing rules of the New York Stock Exchange,
we expressly disclaim any intent or obligation to update any
forward-looking statements, or to update the reasons actual results
could differ materially from those expressed or implied by these
forward-looking statements, whether to conform such statements to
actual results or changes in our expectations, or as a result of
the availability of new information.
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Three Months Ended
December 31,
|
|
Nine Months Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
$
|
873,800
|
|
|
$
|
810,478
|
|
|
$
|
1,626,307
|
|
|
$
|
1,502,655
|
|
Cost of
sales
|
403,707
|
|
|
387,007
|
|
|
789,362
|
|
|
763,442
|
|
Gross
profit
|
470,093
|
|
|
423,471
|
|
|
836,945
|
|
|
739,213
|
|
Selling, general and
administrative expenses
|
225,375
|
|
|
230,280
|
|
|
541,229
|
|
|
534,923
|
|
Income from
operations
|
244,718
|
|
|
193,191
|
|
|
295,716
|
|
|
204,290
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
51
|
|
|
138
|
|
|
325
|
|
|
1,503
|
|
Income before
income taxes
|
244,667
|
|
|
193,053
|
|
|
295,391
|
|
|
202,787
|
|
Income tax
expense
|
48,293
|
|
|
106,712
|
|
|
55,052
|
|
|
109,008
|
|
Net
income
|
196,374
|
|
|
86,341
|
|
|
240,339
|
|
|
93,779
|
|
Other
comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
Unrealized (loss)
gain on cash flow hedges
|
(3,128)
|
|
|
2,509
|
|
|
998
|
|
|
(2,174)
|
|
Foreign currency
translation gain (loss)
|
781
|
|
|
2,037
|
|
|
(10,543)
|
|
|
6,555
|
|
Total other
comprehensive (loss) income
|
(2,347)
|
|
|
4,546
|
|
|
(9,545)
|
|
|
4,381
|
|
Comprehensive
income
|
$
|
194,027
|
|
|
$
|
90,887
|
|
|
$
|
230,794
|
|
|
$
|
98,160
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
Basic
|
$
|
6.74
|
|
|
$
|
2.71
|
|
|
$
|
8.06
|
|
|
$
|
2.93
|
|
Diluted
|
$
|
6.68
|
|
|
$
|
2.69
|
|
|
$
|
7.99
|
|
|
$
|
2.91
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
29,157
|
|
|
31,863
|
|
|
29,807
|
|
|
31,956
|
|
Diluted
|
29,397
|
|
|
32,041
|
|
|
30,063
|
|
|
32,186
|
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollar amounts in
thousands)
|
|
|
December 31,
2018
|
|
March 31,
2018
|
ASSETS
|
(UNAUDITED)
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
515,938
|
|
|
$
|
429,970
|
|
Trade accounts
receivable, net
|
278,962
|
|
|
143,704
|
|
Inventories,
net
|
342,043
|
|
|
299,602
|
|
Other current
assets
|
69,697
|
|
|
37,414
|
|
Total current
assets
|
1,206,640
|
|
|
910,690
|
|
|
|
|
|
Property and
equipment, net
|
215,560
|
|
|
220,162
|
|
Other noncurrent
assets
|
120,251
|
|
|
133,527
|
|
Total
assets
|
$
|
1,542,451
|
|
|
$
|
1,264,379
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
borrowings
|
$
|
600
|
|
|
$
|
578
|
|
Trade accounts
payable
|
228,434
|
|
|
93,939
|
|
Other current
liabilities
|
165,353
|
|
|
94,649
|
|
Total current
liabilities
|
394,387
|
|
|
189,166
|
|
|
|
|
|
Mortgage
payable
|
31,056
|
|
|
31,504
|
|
Other long-term
liabilities
|
99,127
|
|
|
102,930
|
|
Total long-term
liabilities
|
130,183
|
|
|
134,434
|
|
|
|
|
|
Total stockholders'
equity
|
1,017,881
|
|
|
940,779
|
|
Total liabilities
and stockholders' equity
|
$
|
1,542,451
|
|
|
$
|
1,264,379
|
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Three Months Ended
December 31, 2018
|
|
GAAP
Measures
(As
Reported)
|
|
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding
Items)
(2)
(3)
|
Net sales
|
$
|
873,800
|
|
|
|
|
$
|
873,800
|
|
Cost of
sales
|
403,707
|
|
|
|
|
403,707
|
|
Gross
profit
|
470,093
|
|
|
|
|
470,093
|
|
Selling, general and
administrative expenses
|
225,375
|
|
|
2,425
|
|
|
227,800
|
|
Income from
operations
|
244,718
|
|
|
(2,425)
|
|
|
242,293
|
|
|
|
|
|
|
|
Other expense,
net
|
51
|
|
|
|
|
51
|
|
Income before
income taxes
|
244,667
|
|
|
(2,425)
|
|
|
242,242
|
|
Income tax
expense
|
48,293
|
|
|
|
|
48,448
|
|
Net
income
|
$
|
196,374
|
|
|
|
|
$
|
193,794
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
6.74
|
|
|
|
|
$
|
6.65
|
|
Diluted
|
$
|
6.68
|
|
|
|
|
$
|
6.59
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
29,157
|
|
|
|
|
29,157
|
|
Diluted
|
29,397
|
|
|
|
|
29,397
|
|
|
|
(1)
|
Adjustments as of
December 31, 2018 reflect amounts related to organizational changes
and legal matters.
|
(2)
|
The effective tax
rate for the GAAP measures is 19.7% and the tax rate applied to the
Non-GAAP measures is 20% for the three months ended December 31,
2018, which represents our expected effective tax rate for fiscal
year 2019.
|
(3)
|
Figures may not sum
due to rounding.
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Three Months Ended
December 31, 2017
|
|
GAAP
Measures
(As
Reported)
|
|
Restructuring
and
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding Items)
(2)
|
Net sales
|
$
|
810,478
|
|
|
|
|
$
|
810,478
|
|
Cost of
sales
|
387,007
|
|
|
|
|
387,007
|
|
Gross
profit
|
423,471
|
|
|
|
|
423,471
|
|
Selling, general and
administrative expenses
|
230,280
|
|
|
(9,870)
|
|
|
220,410
|
|
Income from
operations
|
193,191
|
|
|
9,870
|
|
|
203,061
|
|
|
|
|
|
|
|
Other expense,
net
|
138
|
|
|
|
|
138
|
|
Income before
income taxes
|
193,053
|
|
|
9,870
|
|
|
202,923
|
|
Income tax
expense
|
106,712
|
|
|
|
|
43,728
|
|
Net
income
|
$
|
86,341
|
|
|
|
|
$
|
159,195
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
2.71
|
|
|
|
|
$
|
5.00
|
|
Diluted
|
$
|
2.69
|
|
|
|
|
$
|
4.97
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
31,863
|
|
|
|
|
31,863
|
|
Diluted
|
32,041
|
|
|
|
|
32,041
|
|
|
|
(1)
|
Amounts as of
December 31, 2017 reflect restructuring, other charges related to
organizational changes and the strategic review process.
|
(2)
|
The difference in
GAAP and non-GAAP tax expense is primarily due to the recently
enacted tax reform and subsequent deferred tax asset charge
associated with the new lower domestic federal tax rate. The tax
rate applied to the Non-GAAP measures is 21.5% for the fiscal
quarter ended December 31, 2017.
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Nine Months Ended
December 31, 2018
|
|
GAAP
Measures
(As
Reported)
|
|
Restructuring
and
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding
Items)
(2)
(3)
|
Net sales
|
$
|
1,626,307
|
|
|
|
|
$
|
1,626,307
|
|
Cost of
sales
|
789,362
|
|
|
|
|
789,362
|
|
Gross
profit
|
836,945
|
|
|
|
|
836,945
|
|
Selling, general and
administrative expenses
|
541,229
|
|
|
1,608
|
|
|
542,836
|
|
Income from
operations
|
295,716
|
|
|
(1,608)
|
|
|
294,109
|
|
|
|
|
|
|
|
Other expense
(income), net
|
325
|
|
|
(445)
|
|
|
(120)
|
|
Income before
income taxes
|
295,391
|
|
|
(1,163)
|
|
|
294,229
|
|
Income tax
expense
|
55,052
|
|
|
|
|
58,794
|
|
Net
income
|
$
|
240,339
|
|
|
|
|
$
|
235,435
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
8.06
|
|
|
|
|
$
|
7.90
|
|
Diluted
|
$
|
7.99
|
|
|
|
|
$
|
7.83
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
29,807
|
|
|
|
|
29,807
|
|
Diluted
|
30,063
|
|
|
|
|
30,063
|
|
|
|
(1)
|
Adjustments as of
December 31, 2018 reflect amounts related to restructuring costs,
organizational changes, legal matters, and charges in connection
with the Company's refinancing of its prior credit
facility.
|
(2)
|
The effective tax
rate for the GAAP measures is 18.6% and the tax rate applied to the
Non-GAAP measures is 20.0% for the nine months ended December 31,
2018. The Non-GAAP tax rate is calculated using the blended
Non-GAAP tax rates for the three months ended June 30, 2018,
September 30, 2018 and December 31, 2018, respectively.
|
(3)
|
Figures may not sum
due to rounding.
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Nine Months Ended
December 31, 2017
|
|
GAAP
Measures
(As
Reported)
|
|
Restructuring
and
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding Items)
(2)
|
Net sales
|
$
|
1,502,655
|
|
|
|
|
$
|
1,502,655
|
|
Cost of
sales
|
763,442
|
|
|
|
|
763,442
|
|
Gross
profit
|
739,213
|
|
|
|
|
739,213
|
|
Selling, general and
administrative expenses
|
534,923
|
|
|
(12,278)
|
|
|
522,645
|
|
Income from
operations
|
204,290
|
|
|
12,278
|
|
|
216,568
|
|
|
|
|
|
|
|
Other expense,
net
|
1,503
|
|
|
|
|
1,503
|
|
Income before
income taxes
|
202,787
|
|
|
12,278
|
|
|
215,065
|
|
Income tax
expense
|
109,008
|
|
|
|
|
47,085
|
|
Net
income
|
$
|
93,779
|
|
|
|
|
$
|
167,980
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
2.93
|
|
|
|
|
$
|
5.26
|
|
Diluted
|
$
|
2.91
|
|
|
|
|
$
|
5.22
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
31,956
|
|
|
|
|
31,956
|
|
Diluted
|
32,186
|
|
|
|
|
32,186
|
|
|
|
(1)
|
Amounts as of
December 31, 2017 reflect charges related to restructuring costs,
other charges related to organizational changes and the strategic
review process.
|
(2)
|
The difference in
GAAP and non-GAAP tax expense is primarily due to the recently
enacted tax reform and subsequent deferred tax asset charge
associated with the new lower domestic federal tax rate. The tax
rate applied to the Non-GAAP measures is 21.9% for the nine
months ended December 31, 2017.
|
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SOURCE Deckers Brands