ROCKFORD, Mich., Feb. 21,
2018 /PRNewswire/ -- Wolverine World Wide, Inc. (NYSE: WWW)
today reported financial results for the fourth quarter and fiscal
year ended December 30, 2017, and
outlined its 2018 GLOBAL GROWTH AGENDA, which is the next phase of
the Company's transformation initiative.
"I am pleased with our fiscal 2017 financial performance and
continued momentum in Q4, but I am especially proud of the major
accomplishments achieved by our team over the last two years," said
Blake W. Krueger, Wolverine
Worldwide's Chairman, Chief Executive Officer and President. "These
results reflect our ability to accelerate the execution and
benefits of recent restructuring and transformation activities, and
we are now positioned to invest in our new GLOBAL GROWTH AGENDA in
2018."
FISCAL 2017 REVIEW
The highlights of the Company's
fourth quarter and full-year financial performance are summarized
below. The fourth quarter revenue and earnings per share amounts
reflect the Company's revised quarterly calendar. To provide a
better comparison to fiscal 2016, the Company has provided
additional information regarding the impact of the calendar change
within the reconciliation tables accompanying the earnings
release.
Fourth Quarter Results
- Reported revenue of $578.6
million decreased 20.7% during the fourth quarter, or
decreased 7.1% after taking into effect the quarterly calendar
change. Underlying revenue increased 1.7%, including nearly 18%
underlying growth for Merrell.
- Reported gross margin was 38.4%, compared to 36.6% in the prior
year. Adjusted gross margin on a constant currency basis was 38.5%,
compared to 37.1% in the prior year, reflecting an improvement of
140 basis points despite a 50 basis point negative mix impact from
store closures.
- Reported operating margin was -12.7%, compared to 2.1% in the
prior year. Adjusted operating margin on a constant currency basis
was 10.7% compared to 8.1% in the prior year.
- Reported diluted loss per share was $0.65, compared to a diluted loss per share of
$0.02 in the prior year. The reported
results include restructuring and transformation costs ($0.24) and other special charges recorded in the
quarter for the non-cash impairment of the Sperry indefinite lived
trade name ($0.45), environmental and
other related costs ($0.28), and the
impact of tax reform ($0.09).
Adjusted diluted earnings per share were $0.41 compared to $0.34 in the prior year, an increase of 20%.
Full-Year Results
- Reported revenue of $2.35 billion
decreased 5.8% vs. the prior year. Underlying revenue grew
0.6%.
- Reported gross margin was 38.9%, compared to 38.5% in the prior
year. Adjusted gross margin on a constant currency basis was 40.0%,
compared to 38.8% in the prior year, reflecting an improvement of
120 basis points despite a 50 basis point negative mix impact from
store closures.
- Reported operating margin was 1.0%, compared to 6.4% in the
prior year. Adjusted operating margin on a constant currency basis
was 11.2%, a 270 basis points increase versus the prior year.
- Reported diluted earnings per share were $0.00 and include full-year costs directly
related to the Company's restructuring and transformation
($0.82) and the special charges
recorded in the fourth quarter as noted above ($0.82). Adjusted diluted earnings per share were
$1.64, and, on a constant currency
basis were $1.71 compared to
$1.36 in the prior year, growth of
nearly 26%.
- The Company closed 215 stores during 2017 leaving 80 go-forward
stores in the fleet.
- Inventory at year end declined 20.6%.
- Cash and cash equivalents on hand at year end were $481 million, up 30% over the prior year, despite
nearly $90 million of cash costs to
execute restructuring and transformation activities during the
year.
- The Company repurchased 1,639,732 shares during fiscal 2017 at
an average price of $25.79 per
share.
- Total shareholder return of over 45% for 2017.
2018 GLOBAL GROWTH AGENDA
"The WOLVERINE WAY FORWARD has been the most ambitious
effort in the Company's nearly 140-year history," stated Mr.
Krueger. "While portions of this work will be ongoing, I'm pleased
to say that the heavy lifting is behind us and the extra costs
required to execute the transformation are complete. We are now
ready to implement new tools and capabilities that were developed
as part of this work, and pivot our focus and energy to
growth."
In 2018, through the realized benefits of its WAY FORWARD
transformation initiative, the Company expects to invest
$40 million to $45 million in its new GLOBAL GROWTH AGENDA,
which is comprised of three key elements:
- Powerful Product Creation Engine - Relentless and frequent
introduction of craveable product that resonates around the world -
taking full advantage of new creative design capabilities, stronger
consumer insights and a faster supply chain.
- Digital-Direct Offense - Seamless interaction with our
consumers through more effective digital engagement to drive our
owned eCommerce growth beyond 20%, improve the on-line businesses
of our retail customers and enhance our brand positioning in the
digital marketplace.
- International Expansion - Greater investment in regional
resources and systems to accelerate international growth, with a
specific focus on China and the
Asia Pacific region.
"This new GLOBAL GROWTH AGENDA represents the next phase of our
transformation," said Mike Stornant,
Senior Vice President and Chief Financial Officer. "We have the
financial capacity to invest in key initiatives and capabilities
expected to fund our biggest growth opportunities and support
accelerated growth beyond 2018. Including these important
investments, we expect to achieve our stated 12% adjusted operating
margin goal ahead of our original schedule. We are excited about
our outlook for 2018, including the expected financial results
included below."
2018 OUTLOOK
- Revenue in the range of $2.24
billion to $2.32 billion, a
reported decline of 1.3% and underlying growth of nearly 6% at the
high-end of the range.
- Gross margin expansion in the range of 40 to 80 basis points,
despite a negative mix impact of 20 basis points from 2017 store
closures.
- Reported operating margin of 11.6% and adjusted operating
margin of 12%, inclusive of incremental investments in the
Company's GLOBAL GROWTH AGENDA.
- An effective tax rate in the range of 18% to 21%, reflecting
new U.S. tax laws.
- Reported diluted earnings per share in the range of
$1.87 to $1.97 and adjusted diluted earnings per share of
$1.95 to $2.05, an increase of 25% at the high-end of the
range. Foreign currency is expected have a neutral impact on
earnings.
- Cash from operations in the range of approximately $230 million to $250
million.
- A 33% increase in the annual dividend.
FISCAL YEAR CALENDAR CHANGE
Prior to fiscal 2017, the
Company reported its quarterly results of operations on the basis
of 12-week periods for each of the first three fiscal quarters and
a 16 or 17-week period for the fiscal fourth quarter. Beginning in
fiscal 2017, the Company's fiscal year is comprised of 13-week
quarters for each of the first three fiscal quarters and a 13 or
14-week period for the fiscal fourth quarter. There is no change to
the Company's fiscal year-end date. References to the "quarter
ended" or "fourth quarter" refer to the 13-week period ended
December 30, 2017 or the 16-week
period ended December 31, 2016.
NON-GAAP FINANCIAL MEASURES
This release contains
certain non-GAAP financial measures. References to "underlying"
revenue for fiscal 2017 and fiscal 2018 indicate reported revenue
adjusted for the impact of foreign exchange, the impact of retail
store closures, the transition of Stride Rite® to
a license business model, the impact of the quarterly calendar
change, and for 2018 guidance the sale of the
Sebago® brand and the sale of the Department of
Defense business. Measures referred to as "adjusted" financial
results exclude impairment of intangible assets, environmental and
other related costs, organizational transformation costs which
include gains or losses from divestitures, restructuring and other
related costs and incremental store inventory mark-downs. In
addition, adjusted diluted earnings per share exclude the impact
from recent tax reform. The Company evaluates results of operations
on both a reported and a constant currency basis. The constant
currency presentation, which is a non-GAAP measure, excludes the
impact of fluctuations in foreign currency exchange rates. The
Company believes providing constant currency information provides
valuable supplemental information regarding results of operations,
consistent with how the Company evaluates performance. The Company
calculates constant currency by converting the current-period local
currency financial results using the prior period exchange rates
and comparing these adjusted amounts to our current period reported
results. The Company has provided a reconciliation of the above of
non-GAAP financial measures to the most directly comparable GAAP
financial measure. The Company believes these non-GAAP measures
provide useful information to both management and investors to
increase comparability to the prior period by adjusting for certain
items that may not be indicative of core operating measures and to
better identify trends in our business. The adjusted financial
results are used by management to, and allow investors to, evaluate
the operating performance of the Company on a comparable basis. The
Company also discusses total shareholder return as a measure of the
performance of the Company's stock over time, which combines share
price appreciation and dividends paid to show the total return to
the shareholder expressed as an annualized percentage.
EARNINGS CALL INFORMATION
The Company will host a
conference call today at 8:30 a.m. Eastern
Time to discuss these results and current business trends.
The conference call will be broadcast live and accessible under the
"Investor Relations" tab at www.wolverineworldwide.com. A replay of
the conference call will be available at the Company's website for
a period of approximately 30 days.
ABOUT WOLVERINE WORLDWIDE
With a commitment to service
and product excellence, Wolverine World Wide, Inc. is one of the
world's leading marketers and licensors of branded casual, active
lifestyle, work, outdoor sport, athletic, children's and uniform
footwear and apparel. The Company's portfolio of highly recognized
brands includes: Merrell®, Sperry®, Hush
Puppies®, Saucony®, Wolverine®,
Keds®, Stride Rite®, Chaco®,
Bates®, HYTEST®, and Soft Style®.
The Company also is the global footwear licensee of the popular
brands Cat® and Harley-Davidson®. The
Company's products are carried by leading retailers in the U.S. and
globally in approximately 200 countries and territories. For
additional information, please visit our website,
www.wolverineworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release contains
forward-looking statements, including statements regarding: the
Company's ability to invest in growth, successfully execute key
strategic initiatives, elevate brands with consumers, and deliver
product innovation, organic and global growth and operational
efficiencies; and the Company's fiscal 2018 outlook and guidance.
In addition, words such as "guidance," "estimates," "anticipates,"
"believes," "forecasts," "step," "plans," "predicts," "focused,"
"projects," "is likely," "expects," "intends," "should," "will,"
"confident," variations of such words, and similar expressions are
intended to identify forward-looking statements. These
statements are not guarantees of future performance and involve
certain risks, uncertainties, and assumptions ("Risk Factors") that
are difficult to predict with regard to timing, extent, likelihood,
and degree of occurrence. Risk Factors include, among
others: changes in general economic conditions, employment
rates, business conditions, interest rates, tax policies and other
factors affecting consumer spending in the markets and regions in
which the Company's products are sold; the inability for any reason
to effectively compete in global footwear, apparel and
consumer-direct markets; the inability to maintain positive brand
images and anticipate, understand and respond to changing footwear
and apparel trends and consumer preferences; the inability to
effectively manage inventory levels; increases or changes in
duties, tariffs, quotas or applicable assessments in countries of
import and export; foreign currency exchange rate fluctuations;
currency restrictions; capacity constraints, production
disruptions, quality issues, price increases or other risks
associated with foreign sourcing; the cost and availability of raw
materials, inventories, services and labor for owned and contract
manufacturers; labor disruptions; changes in relationships with,
including the loss of, significant wholesale customers; risks
related to the significant investment in, and performance of, the
Company's consumer-direct operations; risks related to expansion
into new markets and complementary product categories as well
as consumer-direct operations; the impact of seasonality and
unpredictable weather conditions; changes in general economic
conditions and/or the credit markets on the Company's distributors,
suppliers and customers; increase in the Company's effective tax
rates; failure of licensees or distributors to meet planned annual
sales goals or to make timely payments to the Company; the risks of
doing business in developing countries, and politically or
economically volatile areas; the ability to secure and protect
owned intellectual property or use licensed intellectual property;
the impact of regulation, regulatory and legal proceedings and
legal compliance risks, including compliance with federal, state
and local laws and regulations relating to the protection of the
environment, environmental remediation and other related costs, and
litigation or other legal proceedings relating to the protection of
the environment or environmental effects on human health; the
potential breach of the Company's databases, or those of its
vendors, which contain certain personal information or payment card
data; problems affecting the Company's distribution system,
including service interruptions at shipping and receiving ports;
strategic actions, including new initiatives and ventures,
acquisitions and dispositions, and the Company's success in
integrating acquired businesses, and implementing new initiatives
and ventures; the risk of impairment to goodwill and other acquired
intangibles; the success of the Company's consumer-direct
realignment initiatives; changes in future pension funding
requirements and pension expenses; and additional factors discussed
in the Company's reports filed with the Securities and Exchange
Commission and exhibits thereto. The foregoing Risk Factors, as
well as other existing Risk Factors and new Risk Factors that
emerge from time to time, may cause actual results to differ
materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. Furthermore, the Company
undertakes no obligation to update, amend, or clarify
forward-looking statements.
WOLVERINE WORLD
WIDE, INC.
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In millions,
except per share data)
|
|
|
13 Weeks Ended
December 30,
2017
|
|
16 Weeks Ended
December 31,
2016
|
|
52 Weeks Ended
December 30,
2017
|
|
52 Weeks Ended
December 31,
2016
|
Revenue
|
$
|
578.6
|
|
|
$
|
729.6
|
|
|
$
|
2,350.0
|
|
|
$
|
2,494.6
|
|
Cost of goods
sold
|
355.8
|
|
|
458.3
|
|
|
1,426.6
|
|
|
1,526.4
|
|
Restructuring
costs
|
0.7
|
|
|
4.1
|
|
|
9.0
|
|
|
8.3
|
|
Gross
profit
|
222.1
|
|
|
267.2
|
|
|
914.4
|
|
|
959.9
|
|
Gross
margin
|
38.4
|
%
|
|
36.6
|
%
|
|
38.9
|
%
|
|
38.5
|
%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
184.1
|
|
|
223.5
|
|
|
713.7
|
|
|
758.0
|
|
Restructuring and
other related costs
|
7.3
|
|
|
21.5
|
|
|
72.9
|
|
|
34.9
|
|
Impairment of
intangible assets
|
68.6
|
|
|
7.1
|
|
|
68.6
|
|
|
7.1
|
|
Environmental and
other related costs
|
35.3
|
|
|
—
|
|
|
35.3
|
|
|
—
|
|
Operating
expenses
|
295.3
|
|
|
252.1
|
|
|
890.5
|
|
|
800.0
|
|
Operating expenses
as a % of revenue
|
51.0
|
%
|
|
34.6
|
%
|
|
37.9
|
%
|
|
32.1
|
%
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
(73.2)
|
|
|
15.1
|
|
|
23.9
|
|
|
159.9
|
|
Operating
margin
|
(12.7)%
|
|
|
2.1
|
%
|
|
1.0
|
%
|
|
6.4
|
%
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
8.7
|
|
|
9.9
|
|
|
32.1
|
|
|
34.8
|
|
Debt extinguishment
and other costs
|
—
|
|
|
17.6
|
|
|
—
|
|
|
18.1
|
|
Other expense
(income), net
|
(1.0)
|
|
|
(4.5)
|
|
|
2.4
|
|
|
(3.5)
|
|
Total other
expenses
|
7.7
|
|
|
23.0
|
|
|
34.5
|
|
|
49.4
|
|
Earnings (loss)
before income taxes
|
(80.9)
|
|
|
(7.9)
|
|
|
(10.6)
|
|
|
110.5
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
(20.1)
|
|
|
(5.5)
|
|
|
(9.9)
|
|
|
23.0
|
|
Effective tax
rate
|
25.0
|
%
|
|
69.7
|
%
|
|
93.7
|
%
|
|
20.8
|
%
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
(60.8)
|
|
|
(2.4)
|
|
|
(0.7)
|
|
|
87.5
|
|
|
|
|
|
|
|
|
|
Less: net loss
attributable to noncontrolling interests
|
(0.5)
|
|
|
(0.5)
|
|
|
(1.0)
|
|
|
(0.2)
|
|
Net earnings (loss)
attributable to Wolverine World
Wide, Inc.
|
$
|
(60.3)
|
|
|
$
|
(1.9)
|
|
|
$
|
0.3
|
|
|
$
|
87.7
|
|
Earnings (loss) per
share
|
$
|
(0.65)
|
|
|
$
|
(0.02)
|
|
|
$
|
—
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
|
|
|
|
Net earnings (loss)
used to calculate earnings
(loss) per share
|
$
|
(60.3)
|
|
|
$
|
(2.0)
|
|
|
$
|
0.1
|
|
|
$
|
85.7
|
|
Shares used to
calculate earnings (loss) per share
|
93.2
|
|
|
95.8
|
|
|
95.4
|
|
|
96.2
|
|
Weighted average
shares outstanding
|
95.8
|
|
|
98.3
|
|
|
96.4
|
|
|
99.0
|
|
WOLVERINE WORLD
WIDE, INC.
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
December 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
481.0
|
|
|
$
|
369.8
|
|
Accounts receivables,
net
|
271.3
|
|
|
263.3
|
|
Inventories,
net
|
276.7
|
|
|
348.7
|
|
Other current
assets
|
45.3
|
|
|
49.6
|
|
Total current
assets
|
1,074.3
|
|
|
1,031.4
|
|
Property, plant and
equipment, net
|
136.7
|
|
|
146.1
|
|
Goodwill and other
indefinite-lived intangibles
|
1,034.3
|
|
|
1,102.8
|
|
Other non-current
assets
|
153.7
|
|
|
151.4
|
|
Total
assets
|
$
|
2,399.0
|
|
|
$
|
2,431.7
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Accounts payable and
other accrued liabilities
|
$
|
324.3
|
|
|
$
|
293.3
|
|
Current maturities of
long-term debt
|
37.5
|
|
|
37.5
|
|
Borrowings under
revolving credit agreements and other short-term notes
|
0.5
|
|
|
2.9
|
|
Total current
liabilities
|
362.3
|
|
|
333.7
|
|
Long-term
debt
|
744.6
|
|
|
780.3
|
|
Other non-current
liabilities
|
336.9
|
|
|
343.6
|
|
Stockholders'
equity
|
955.2
|
|
|
974.1
|
|
Total liabilities and
stockholders' equity
|
$
|
2,399.0
|
|
|
$
|
2,431.7
|
|
WOLVERINE WORLD
WIDE, INC.
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
Fiscal Year
Ended
|
|
December 30,
2017
|
|
December 31,
2016
|
OPERATING
ACTIVITIES:
|
|
|
|
Net earnings
(loss)
|
$
|
(0.7)
|
|
|
$
|
87.5
|
|
Adjustments to
reconcile net earnings (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
37.2
|
|
|
43.5
|
|
Deferred income
taxes
|
(75.8)
|
|
|
(5.8)
|
|
Stock-based
compensation expense
|
25.4
|
|
|
22.8
|
|
Excess tax benefits
from stock-based compensation
|
—
|
|
|
(0.6)
|
|
Pension and SERP
expense
|
14.9
|
|
|
10.4
|
|
Debt extinguishment
costs
|
—
|
|
|
17.4
|
|
Restructuring and
other related costs
|
81.9
|
|
|
43.2
|
|
Cash payments related
to restructuring costs
|
(64.8)
|
|
|
(19.4)
|
|
Impairment of
intangible assets
|
68.6
|
|
|
7.1
|
|
Environmental and
other related costs, net of cash payments
|
32.3
|
|
|
—
|
|
Other
|
(29.6)
|
|
|
(7.8)
|
|
Changes in operating
assets and liabilities
|
113.3
|
|
|
98.0
|
|
Net cash provided by
operating activities
|
202.7
|
|
|
296.3
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Additions to
property, plant and equipment
|
(32.4)
|
|
|
(55.3)
|
|
Proceeds from sale of
a business and other assets
|
38.6
|
|
|
7.8
|
|
Investment in joint
venture
|
(2.1)
|
|
|
(0.5)
|
|
Other
|
(5.1)
|
|
|
9.6
|
|
Net cash used in
investing activities
|
(1.0)
|
|
|
(38.4)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Net borrowings
(payments) under revolving credit agreements and other short-term
notes
|
(2.6)
|
|
|
3.1
|
|
Borrowings of
long-term debt
|
—
|
|
|
400.0
|
|
Payments on long-term
debt
|
(37.5)
|
|
|
(393.8)
|
|
Payments of debt
issuance and debt extinguishment costs
|
(0.1)
|
|
|
(17.9)
|
|
Cash dividends
paid
|
(23.0)
|
|
|
(23.5)
|
|
Purchase of common
stock for treasury
|
(51.5)
|
|
|
(52.7)
|
|
Purchases of shares
under employee stock plans
|
(5.5)
|
|
|
(4.9)
|
|
Proceeds from the
exercise of stock options
|
21.4
|
|
|
7.4
|
|
Excess tax benefits
from stock-based compensation
|
—
|
|
|
0.6
|
|
Contributions from
noncontrolling interests
|
0.8
|
|
|
2.2
|
|
Net cash used in
financing activities
|
(98.0)
|
|
|
(79.5)
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
7.5
|
|
|
(2.7)
|
|
Increase in cash and
cash equivalents
|
111.2
|
|
|
175.7
|
|
|
|
|
|
Cash and cash
equivalents at beginning of the year
|
369.8
|
|
|
194.1
|
|
Cash and cash
equivalents at end of the year
|
$
|
481.0
|
|
|
$
|
369.8
|
|
The following tables contain information regarding the non-GAAP
adjustments used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE, INC.
Q4 2017 RECONCILIATION TABLES
RECONCILIATION OF
REPORTED REVENUE TO
|
UNDERLYING
REVENUE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Impact of
Quarterly
Calendar Change (1)
|
|
As
Adjusted
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(2)
|
|
Underlying
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue - Fiscal 2017
Q4
|
$
|
578.6
|
|
|
|
|
$
|
578.6
|
|
|
$
|
(4.5)
|
|
|
|
|
$
|
574.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
(20.7)%
|
|
|
|
|
(7.1)%
|
|
|
|
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue - Fiscal 2016
Q4
|
$
|
729.6
|
|
|
$
|
(106.9)
|
|
|
$
|
622.7
|
|
|
|
|
$
|
(58.1)
|
|
|
$
|
564.6
|
|
|
|
(1)
|
Given the change in
the quarterly calendar resulting in the fourth quarter of fiscal
2017 containing 13 weeks ending
December 30, 2017 and the fourth quarter of fiscal 2016 containing
16 weeks ending December 31, 2016, the Company
quantified the impact of the change for a better comparison to the
fourth quarter of fiscal 2017.
|
(2)
|
Adjustments include
the estimated impact from retail store closures and the transition
of Stride Rite® to a license business
model.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED GROSS MARGIN TO ADJUSTED
|
GROSS MARGIN ON A
CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Impact of
Quarterly
Calendar Change (1)
|
|
Restructuring
Costs
|
|
Foreign
Exchange
Impact
|
|
As Adjusted on
a Constant
Currency Basis
|
|
|
|
|
|
|
|
|
|
|
Gross Profit - Fiscal
2017 Q4
|
$
|
222.1
|
|
|
|
|
$
|
0.7
|
|
|
$
|
(1.5)
|
|
|
$
|
221.3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
38.4
|
%
|
|
|
|
|
|
|
|
38.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Gross Profit - Fiscal
2016 Q4
|
$
|
267.2
|
|
|
$
|
(40.0)
|
|
|
$
|
4.1
|
|
|
|
|
$
|
231.3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
36.6
|
%
|
|
|
|
|
|
|
|
37.1
|
%
|
|
|
(1)
|
Given the change in
the quarterly calendar resulting in the fourth quarter of fiscal
2017 containing 13 weeks
ending December 30, 2017 and the fourth quarter of fiscal 2016
containing 16 weeks ending December 31, 2016,
the Company quantified the impact of the change for a better
comparison to the fourth quarter of fiscal 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED OPERATING MARGIN TO ADJUSTED
|
OPERATING MARGIN
ON A CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Impact of
Quarterly
Calendar Change (1)
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(2)
|
|
As Adjusted on
a Constant
Currency Basis
|
|
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2017 Q4
|
$
|
(73.2)
|
|
|
|
|
$
|
(0.2)
|
|
|
$
|
134.7
|
|
|
$
|
61.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
(12.7)%
|
|
|
|
|
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2016 Q4
|
$
|
15.1
|
|
|
$
|
0.4
|
|
|
|
|
$
|
34.9
|
|
|
$
|
50.4
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
2.1
|
%
|
|
|
|
|
|
|
|
8.1
|
%
|
|
|
(1)
|
Given the change in
the quarterly calendar resulting in the fourth quarter of fiscal
2017 containing 13 weeks ending
December 30, 2017 and the fourth quarter of fiscal 2016 containing
16 weeks ending December 31, 2016, the Company
quantified the impact of the change for a better comparison to the
fourth quarter of fiscal 2017.
|
(2)
|
Fiscal 2017 Q4
Adjustments include $68.6 million for impairment of intangible
assets, $35.3 million of environmental and
other related costs, $22.8 million of organizational transformation
costs and $8.0 million of restructuring and other related
costs. Fiscal 2016 Q4 Adjustments include $25.6 million of
restructuring and other related costs, $7.1 million of
impairment
of intangible assets and $2.2 million of organizational
transformation costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED DILUTED EPS
|
TO ADJUSTED
DILUTED EPS*
|
(Unaudited)
|
|
|
GAAP Basis
EPS
|
|
Adjustments
(1)
|
|
As Adjusted
EPS
|
|
|
|
|
|
|
Fiscal 2017
Q4
|
$
|
(0.65)
|
|
|
$
|
1.06
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
Fiscal 2016
Q4
|
$
|
(0.02)
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
|
(1)
|
Fiscal 2017 Q4
Adjustments include the impact of impairment of intangible assets,
environmental and other related costs, organizational
transformation costs, restructuring and other related costs, the
impact of recent tax reform and the impact of the quarterly
calendar change. Fiscal 2016 Q4 Adjustments include the impact of
impairment of intangible assets, restructuring and other related
costs, organizational transformation costs and debt extinguishment
and other costs.
|
2017 FULL-YEAR RECONCILIATION TABLES
RECONCILIATION OF
REPORTED REVENUE TO
|
UNDERLYING
REVENUE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(1)
|
|
Underlying
Revenue
|
|
|
|
|
|
|
|
|
Revenue - Fiscal
2017
|
2,350.0
|
|
|
$
|
(1.7)
|
|
|
|
|
$
|
2,348.3
|
|
|
|
|
|
|
|
|
|
Growth
|
(5.8)%
|
|
|
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
Revenue - Fiscal
2016
|
$
|
2,494.6
|
|
|
|
|
$
|
(159.3)
|
|
|
$
|
2,335.3
|
|
|
|
(1)
|
Adjustments include
the estimated impact from retail store closures and the transition
of Stride Rite® to
a license business model.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED GROSS MARGIN TO ADJUSTED
|
GROSS MARGIN ON A
CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Adjustments
(1)
|
|
Foreign
Exchange
Impact
|
|
As Adjusted
on a Constant
Currency
Basis
|
|
|
|
|
|
|
|
|
Gross Profit - Fiscal
2017
|
$
|
914.4
|
|
|
$
|
16.5
|
|
|
$
|
7.2
|
|
|
$
|
938.1
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
38.9
|
%
|
|
|
|
|
|
40.0
|
%
|
|
|
|
|
|
|
|
|
Gross Profit - Fiscal
2016
|
$
|
959.9
|
|
|
$
|
8.3
|
|
|
|
|
$
|
968.2
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
38.5
|
%
|
|
|
|
|
|
38.8
|
%
|
|
|
(1)
|
Fiscal 2017
Adjustments include restructuring costs and incremental inventory
mark-downs.
Fiscal 2016 Adjustments include restructuring costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED OPERATING MARGIN TO ADJUSTED
|
OPERATING MARGIN
ON A CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(1)
|
|
As Adjusted on
a Constant
Currency Basis
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2017
|
$
|
23.9
|
|
|
$
|
7.4
|
|
|
$
|
231.1
|
|
|
$
|
262.4
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
1.0
|
%
|
|
|
|
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
Operating Profit -
Fiscal 2016
|
$
|
159.9
|
|
|
|
|
$
|
52.5
|
|
|
$
|
212.4
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
6.4
|
%
|
|
|
|
|
|
8.5
|
%
|
|
|
(1)
|
Fiscal 2017
Adjustments include $81.9 million of restructuring and other
related costs, $37.8 million of organizational transformation
costs, $7.5 million of incremental inventory mark-downs, $68.6
million for impairment of intangible assets and $35.3 million
of
environmental and other related costs. Fiscal 2016 Adjustments
include $43.2 million of restructuring and other related costs,
$7.1 million
of impairment of intangible assets, and $2.2 million of
organizational transformation costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
REPORTED DILUTED EPS TO ADJUSTED
|
DILUTED EPS ON A
CONSTANT CURRENCY BASIS*
|
(Unaudited)
|
|
|
GAAP Basis
EPS
|
|
Adjustments
(1)
|
|
As Adjusted
EPS
|
|
Foreign
Exchange
Impact
|
|
As Adjusted
EPS On a
Constant
Currency Basis
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2017
|
$
|
—
|
|
|
$
|
1.64
|
|
|
$
|
1.64
|
|
|
$
|
0.07
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2016
|
$
|
0.89
|
|
|
$
|
0.47
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
(1)
|
Fiscal 2017
Adjustments include the impact of restructuring and other related
costs, organizational transformation costs, incremental inventory
mark-downs, impairment of intangible assets, environmental and
other related costs and the impact of recent tax reform. Fiscal
2016 Adjustments include the impact of impairment of intangible
assets, restructuring and other related costs, organizational
transformation costs and debt extinguishment and other
costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FISCAL 2017
ADJUSTMENTS TO
|
REPORTED DILUTED
EPS
|
(Unaudited)
|
|
Adjustment
Description
|
|
Impact to Fiscal
2017 Diluted EPS
|
|
|
|
Restructuring and
other related costs
|
|
$
|
0.52
|
|
Organizational
transformation costs and incremental
inventory mark-downs
|
|
0.30
|
|
Impairment of
intangible assets
|
|
0.45
|
|
Environmental and
other costs (1)
|
|
0.28
|
|
Impact of recent tax
reform
|
|
0.09
|
|
Total
adjustments
|
|
$
|
1.64
|
|
|
|
(1)
|
Environmental and
other costs includes estimated future environmental remediation
costs of $31.1 million and $4.2 million for legal, consulting and
other costs.
|
2018 GUIDANCE RECONCILIATION TABLES
RECONCILIATION OF
FISCAL 2018 FULL-YEAR REPORTED REVENUE
|
GUIDANCE TO
UNDERLYING REVENUE GUIDANCE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
Full-Year
Revenue
|
|
Foreign
Exchange
Impact
|
|
Adjustments
(1)
|
|
Underlying
Full-
Year Revenue
|
|
|
|
|
|
|
|
|
Fiscal 2018 Revenue
Guidance
|
$
2,240 - 2,320
|
|
$
|
(4.0)
|
|
|
|
|
$
2,236 - 2,316
|
Fiscal 2017
Revenue
|
$
|
2,350.0
|
|
|
|
|
$
|
(159.0)
|
|
|
$
|
2,191.0
|
|
Percentage growth
(decline)
|
(4.7) -
(1.3)%
|
|
|
|
|
|
2.1 -
5.7%
|
|
|
(1)
|
Adjustments include
the impact from retail store closures, the transition of Stride
Rite® to a license business model, the sale of
Sebago® and the sale of the Department of Defense
business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
FISCAL 2018 FULL-YEAR REPORTED OPERATING PROFIT
|
GUIDANCE TO
ADJUSTED OPERATING PROFIT GUIDANCE*
|
(Unaudited)
|
(In
millions)
|
|
|
GAAP
Basis
Full-Year
Operating Profit
|
|
Adjustment
(1)
|
|
As
Adjusted
Full-Year
Operating Profit
|
|
|
|
|
|
|
Fiscal 2018 Operating
Profit Guidance
|
$
256 - 275
|
|
$
|
10.0
|
|
|
$
266 - 285
|
Operating Margin
Guidance
|
11.4 -
11.9%
|
|
|
|
11.9 -
12.3%
|
|
|
(1)
|
Adjustment includes
the estimated midpoint within a $8 million to $12 million range of
environmental related costs for legal, consulting and other
costs.
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
FISCAL 2018 FULL-YEAR DILUTED EPS
|
GUIDANCE TO
ADJUSTED DILUTED EPS GUIDANCE*
|
(Unaudited)
|
|
|
GAAP
Basis
Full-Year
2018
|
|
Adjustments
(1)
|
|
As
Adjusted
Full-Year
2018
|
|
|
|
|
|
|
Diluted earnings per
share guidance
|
$ 1.87
- 1.97
|
|
$
|
0.08
|
|
|
$ 1.95
- 2.05
|
|
|
(1)
|
Adjustment includes
the estimated midpoint within a range of environmental related
costs for legal, consulting and other costs.
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
FISCAL 2016 REPORTED REVENUE AND EPS
|
TO ADJUSTED
REVENUE AND ADJUSTED EPS*
|
(Unaudited)
|
(In
millions)
|
|
|
|
Fiscal
2016
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
YTD
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis Fiscal
2016 - Revenue
|
$
|
577.6
|
|
|
$
|
583.7
|
|
|
$
|
603.7
|
|
|
$
|
729.6
|
|
|
$
|
2,494.6
|
|
Impact of Calendar
Change - Revenue (1)
|
43.2
|
|
|
35.5
|
|
|
28.2
|
|
|
(106.9)
|
|
|
—
|
|
Revenue on an
Adjusted Basis
|
$
|
620.8
|
|
|
$
|
619.2
|
|
|
$
|
631.9
|
|
|
$
|
622.7
|
|
|
$
|
2,494.6
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis Fiscal
2016 - Diluted EPS
|
$
|
0.18
|
|
|
$
|
0.24
|
|
|
$
|
0.49
|
|
|
$
|
(0.02)
|
|
|
$
|
0.89
|
|
Impact of Calendar
Change - EPS (1)
|
0.02
|
|
|
0.01
|
|
|
(0.04)
|
|
|
0.01
|
|
|
—
|
|
Impact of
Restructuring and Impairment Costs
|
0.11
|
|
|
0.01
|
|
|
—
|
|
|
0.35
|
|
|
0.47
|
|
EPS on an Adjusted
Basis
|
$
|
0.31
|
|
|
$
|
0.26
|
|
|
$
|
0.45
|
|
|
$
|
0.34
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2016 weeks
in operations
|
12
|
|
|
12
|
|
|
12
|
|
|
16
|
|
|
52
|
|
Fiscal 2016 -
Adjusted weeks in operations
|
13
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
52
|
|
|
|
(1)
|
Given the first three
fiscal 2016 quarters had 12 weeks and the fourth quarter had 16
weeks of operations compared to fiscal 2017 where each quarter has
13 weeks of operations, the Company quantified the impact of
adjusting each fiscal 2016 quarter to allow for a better comparison
to fiscal 2017.
|
|
|
*
|
To supplement the
consolidated financial statements presented in accordance with
Generally Accepted Accounting Principles ("GAAP"), the Company
describes what certain financial measures would have been if
restructuring and other related costs, incremental inventory
mark-downs, organizational transformation costs which include gains
or losses from divestitures, impairment of intangible assets,
environmental and other related costs and the impact from recent
tax reform were excluded. The Company also describes
underlying revenue, which excludes the impact of foreign exchange,
the impact of retail store closures, the transition of Stride
Rite® to a license business model, the impact of the
quarterly calendar change, and for 2018 guidance the sale of the
Sebago® brand and the sale of the Department of
Defense business. The Company believes these non-GAAP measures
provide useful information to both management and investors to
increase comparability to the prior period by adjusting for certain
items that may not be indicative of core operating measures and to
better identify trends in our business. The adjusted
financial results are used by management to, and allow investors
to, evaluate the operating performance of the Company on a
comparable basis. The Company evaluates results of operations
on both a reported and a constant currency basis. The constant
currency presentation, which is a non-GAAP measure, excludes the
impact of fluctuations in foreign currency exchange rates. The
Company believes providing constant currency information provides
valuable supplemental information regarding results of operations,
consistent with how the Company evaluates performance. The Company
calculates constant currency by converting the current-period local
currency financial results using the prior period exchange rates
and comparing these adjusted amounts to our current period reported
results. Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a substitution
for, financial information prepared in accordance with GAAP.
A reconciliation of all non-GAAP measures included in this press
release, to the most directly comparable GAAP measures are found in
the financial tables above.
|
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content:http://www.prnewswire.com/news-releases/wolverine-worldwide-outlines-2018-global-growth-agenda-and-reports-fiscal-2017-financial-results-300601629.html
SOURCE Wolverine World Wide, Inc.