Perry Ellis International, Inc. (NASDAQ:PERY) today reported
results for the first quarter ended April 29, 2017 (“first quarter
of fiscal 2018”).
Key Fiscal First Quarter 2018 Financial Accomplishments and
Operational Highlights:
- Total Revenues of $242 million, ahead of guidance of $230 to
$235 million and compared to $261 million reported in the first
quarter of fiscal 2017
- GAAP diluted EPS of $0.83, ahead of guidance of $0.70 to $0.75
per diluted share and compared to GAAP diluted EPS of $0.95 per
share and adjusted diluted EPS of $1.01 in the first quarter of
fiscal 2017
- GAAP Gross margin expanded 120 basis points to 37.6%; and
adjusted gross margin expanded 90 basis points
The Company had a solid start to the year but notes the retail
environment remains tenuous, as such, it is reiterating guidance
for fiscal year 2018 including revenues in a range of $870 million
to $880 million and adjusted diluted earnings per share in a range
of $2.07 to $2.17.
Oscar Feldenkreis, Chief Executive Officer and President,
commented, "We are pleased to report a solid start to Fiscal 2018
with both our top and bottom line results surpassing guidance,
reflecting solid growth in our core brands driven by the earlier
shipment of Spring merchandise and strong gross margin
expansion. Our razor sharp focus on maximizing the potential
of our core global brands by delivering a continuous flow of new
innovative products while maintaining tight inventory discipline
continued to serve us well in a difficult U.S. retail environment,
with particular strength in Golf Lifestyle Apparel and Nike Swim.
During the quarter, we also continued to make progress on our
speed-to-market initiatives, which position us to bring new
innovation to store faster at increasing margins and replenish the
most sought after products in season.”
Fiscal 2018 First Quarter Results
Total revenue was $242 million, a 7.3% decrease (6.5% decrease
on constant currency) compared to $261 million reported in the
first quarter of fiscal 2017. This reflected a planned decrease in
shipments given a reduction of customers’ doors and inventory
discipline to drive higher margin sales. The disciplined management
of inventory across channels along with increased sales of higher
margin core brands led to a 120 basis point expansion in GAAP gross
margin to 37.6% in the first quarter from 36.4% in first quarter of
fiscal 2017. Adjusted gross margin was 37.6% compared with adjusted
gross margin of 36.7% in the comparable period of the prior
year. (Adjusted gross margin excludes certain items as
outlined in Table 2 Reconciliation of Gross Profit to Adjusted
Gross Profit and Adjusted Gross Margin.)
Selling, general and administrative expenses totaled $71.2
million as compared with $69.9 million in the comparable period of
the prior year. SG&A in first quarter of fiscal 2018
included $1.0 million of unanticipated costs that are not expected
to continue. Excluding this, SG&A was in line with prior
year.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the first quarter of fiscal 2018 totaled $19.9
million, as compared to $25.2 million in the comparable period of
the prior year. Adjusted EBITDA totaled $19.9 million as compared
to $26.1 million in the comparable period of the prior year.
(Adjusted EBITDA excludes certain items as outlined in Table 3,
Reconciliation of Net Income to EBITDA and Adjusted EBITDA.)
As reported under GAAP, the first quarter of fiscal 2018 net
income was $12.8 million or $0.83 per diluted share, compared to
GAAP net income of $14.3 million, or $0.95 per diluted share and
adjusted net income of $15.2 million, or $1.01 per diluted share,
in the first quarter of fiscal 2017. (Adjusted net income and
adjusted earnings per diluted share exclude certain items as
outlined in Table 1 Reconciliation of net income and income per
diluted share to adjusted net income and adjusted net income per
diluted share.)
Balance Sheet
The Company's financial position continues to get
stronger. Cash and investments at the end of first quarter
fiscal 2018 totaled $43 million with $148 million of long-term
debt. The Company’s net debt to total capitalization stood at 24.3%
at the end of first quarter fiscal 2018 as compared to 30.5% at the
end of first quarter fiscal 2017. Working capital management
continues to be a critical focus across the organization as
inventory turned at approximately 4x for first quarter fiscal
2018.
George Feldenkreis, Executive Chairman, Perry Ellis
International, commented, "We continue to successfully
navigate the changing U.S. retail environment, as demonstrated by
our solid first quarter performance. Our investment in
talent, marketing and our digital platform is elevating our brands
around the world. We are committed to delivering stockholder
value and believe our strong balance sheet and cash flow generation
along with the continued focus on our strategy will support the
long-term growth potential of Perry Ellis International.”
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,
dresses 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®, An Original Penguin® by Munsingwear®, Laundry by
Shelli Segal®, Rafaella®, Cubavera®, Ben Hogan®, Savane®, Grand
Slam®, John Henry®, Manhattan®,
Axist®, Jantzen® and Farah®. The Company enhances
its roster of brands by licensing trademarks from third parties,
including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR®,
and Jack Nicklaus® for golf apparel. Additional information on
the Company is available at http://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" or the negative thereof or other variations thereon and
similar words or phrases or comparable terminology. Such
forward-looking statements include, but are not limited to,
statements regarding Perry Ellis’ strategic operating review,
growth initiatives and internal operating improvements intended to
drive revenues and enhance profitability, the implementation of
Perry Ellis’ profitability improvement plan and Perry Ellis’ plans
to exit underperforming, low growth brands and businesses. 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, including, but not limited to these caused by port
disruptions, disruptions due to weather patterns, 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 effectiveness of our plans,
strategies, objectives, expectations and intentions which are
subject to change at any time at our discretion, potential cyber
risk and technology failures which could disrupt operations or
result in a data breach, the level of consumer spending for apparel
and other merchandise, our ability to compete, exposure to foreign
currency risk and interest rate risk, the impact to our business
resulting from the United Kingdom’s referendum vote to exit the
European Union and the uncertainty surrounding the terms and
conditions of such a withdrawal, as well as the related impact to
global stock markets and currency exchange rates; possible
disruption in commercial activities due to terrorist activity and
armed conflict, actions of activist investors and the cost and
disruption of responding to those actions, and other factors set
forth in Perry Ellis' 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 29, 2017 |
|
April 30, 2016 |
|
|
|
|
|
Revenues |
|
|
|
|
Net sales |
|
$ |
233,823 |
|
$ |
250,875 |
Royalty
income |
|
|
8,267 |
|
|
10,419 |
Total revenues |
|
|
242,090 |
|
|
261,294 |
Cost of sales |
|
|
151,002 |
|
|
166,210 |
Gross profit |
|
|
91,088 |
|
|
95,084 |
Operating expenses |
|
|
|
|
Selling, general
and administrative expenses |
|
|
71,199 |
|
|
69,934 |
Depreciation and
amortization |
|
|
3,468 |
|
|
3,467 |
Total operating expenses |
|
|
74,667 |
|
|
73,401 |
Operating income |
|
|
16,421 |
|
|
21,683 |
Interest expense |
|
|
1,956 |
|
|
2,025 |
|
|
|
|
|
Net income before
income taxes |
|
|
14,465 |
|
|
19,658 |
Income tax
provision |
|
|
1,694 |
|
|
5,408 |
Net income |
|
$ |
12,771 |
|
$ |
14,250 |
|
|
|
|
|
Net income, per
share |
|
|
|
|
Basic |
|
$ |
0.85 |
|
$ |
0.96 |
Diluted |
|
$ |
0.83 |
|
$ |
0.95 |
|
|
|
|
|
Weighted average number
of shares outstanding |
|
|
|
|
Basic |
|
|
15,009 |
|
|
14,810 |
Diluted |
|
|
15,303 |
|
|
15,060 |
|
|
|
|
|
PERRY ELLIS
INTERNATIONAL, INC. AND SUBSIDIARIES |
SELECTED FINANCIAL DATA
(UNAUDITED) |
(amounts in 000's) |
|
|
BALANCE SHEET DATA: |
|
|
|
|
As of |
|
April 29, 2017 |
|
January 28, 2017 |
|
|
|
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash
equivalents |
$ |
26,404 |
|
$ |
30,695 |
Investments |
|
16,515 |
|
|
10,921 |
Accounts
receivable, net |
|
183,668 |
|
|
140,240 |
Inventories |
|
139,632 |
|
|
151,251 |
Other current assets |
|
6,287 |
|
|
8,109 |
Total current assets |
|
372,506 |
|
|
341,216 |
|
|
|
|
Property and equipment,
net |
|
60,668 |
|
|
61,835 |
Intangible assets,
net |
|
186,842 |
|
|
187,051 |
Deferred income
taxes |
|
461 |
|
|
334 |
Other assets |
|
2,278 |
|
|
2,269 |
|
|
|
|
Total assets |
$ |
622,755 |
|
$ |
592,705 |
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
60,224 |
|
$ |
92,843 |
Accrued expenses and
other liabilities |
|
27,537 |
|
|
20,861 |
Accrued interest
payable |
|
543 |
|
|
1,450 |
Income taxes
payable |
|
1,748 |
|
|
- |
Unearned revenues |
|
2,896 |
|
|
2,710 |
Other current
liabilities |
|
|
|
Total
current liabilities |
|
92,948 |
|
|
117,864 |
|
|
|
|
|
|
|
|
Long term
liabilities: |
|
|
|
Senior subordinated
notes payable, net |
|
49,709 |
|
|
49,673 |
Senior credit
facility |
|
64,128 |
|
|
22,504 |
Real estate
mortgages |
|
33,369 |
|
|
33,591 |
Unearned revenues and
other long-term liabilities |
|
54,734 |
|
|
55,386 |
Total
long-term liabilities |
|
201,940 |
|
|
161,154 |
|
|
|
|
Total liabilities |
|
294,888 |
|
|
279,018 |
|
|
|
|
Equity |
|
|
|
|
|
|
|
Total equity |
|
327,867 |
|
|
313,687 |
|
|
|
|
Total liabilities and
equity |
$ |
622,755 |
|
$ |
592,705 |
|
|
|
|
PERRY ELLIS
INTERNATIONAL, INC. AND SUBSIDIARIES |
Table 1 |
RECONCILIATION OF NET INCOME AND INCOME
PER DILUTED SHARE TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME
PER DILUTED SHARE |
(UNAUDITED) |
(amounts in 000's, except per share
information) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
April 29, 2017 |
|
April 30, 2016 |
Net
income |
|
|
$ |
12,771 |
|
$ |
14,250 |
Adjustments: |
|
|
|
|
|
Costs on
exited brands |
|
|
|
- |
|
|
869 |
Costs of
streamlining and consolidation of operations, legal settlement and
other strategic initiatives |
|
|
|
- |
|
|
54 |
Net income,
as adjusted (1) |
|
|
$ |
12,771 |
|
$ |
15,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
April 29, 2017 |
|
April 30, 2016 |
Net income
per share, diluted |
|
|
$ |
0.83 |
|
$ |
0.95 |
|
|
|
|
|
|
|
Net per
share costs on exited brands |
|
|
|
- |
|
|
0.06 |
Adjusted net income per share, diluted (1) |
|
|
$ |
0.83 |
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Net income, as adjusted, and adjusted net income per share,
diluted, consist of net income or net income per share, diluted, as
the case may be, adjusted for the impact of the costs on
exited brands, and costs of streamlining and consolidation of
operations, legal settlement, and other strategic
initiatives. These costs are not indicative of our core
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 GROSS PROFIT
TO ADJUSTED GROSS PROFIT
AND ADJUSTED GROSS MARGIN(1) |
(UNAUDITED) |
(amounts in 000's) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
April 29, 2017 |
|
April 30, 2016 |
|
|
|
|
|
|
Gross
profit |
|
$ |
91,088 |
|
|
$ |
95,084 |
|
|
|
|
|
|
|
Costs on exited brands |
|
|
- |
|
|
|
869 |
|
|
|
|
|
|
|
Gross
profit, as adjusted |
|
$ |
91,088 |
|
|
$ |
95,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
242,090 |
|
|
$ |
261,294 |
|
|
|
|
|
|
|
Gross
margin, as adjusted |
|
|
37.6 |
% |
|
|
36.7 |
% |
|
|
|
|
|
(1 |
) |
Adjusted gross profit consists of gross profit adjusted
for costs on exited brands. We believe these costs are
not indicative of our core operations and thus we have
removed them to provide investors and analysts with a more
comparable result when comparing our operating performance to that
of the apparel industry. |
|
PERRY ELLIS
INTERNATIONAL, INC. AND SUBSIDIARIES |
Table 3 |
RECONCILIATION OF NET INCOME TO EBITDA AND
ADJUSTED EBITDA(1) |
(UNAUDITED) |
(amounts in 000's) |
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
April 29, 2017 |
|
April 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
12,771 |
|
|
$ |
14,250 |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,468 |
|
|
|
3,467 |
|
Interest expense |
|
|
1,956 |
|
|
|
2,025 |
|
Income tax provision |
|
|
1,694 |
|
|
|
5,408 |
|
EBITDA |
|
|
|
19,889 |
|
|
|
25,150 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
Costs on
exited brands |
|
|
- |
|
|
|
869 |
|
Costs of
streamlining and consolidation of operations, legal settlement, and
other strategic initiatives |
|
- |
|
|
|
54 |
|
|
|
|
|
|
|
EBITDA, as
adjusted |
|
$ |
19,889 |
|
|
$ |
26,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
91,088 |
|
|
$ |
95,084 |
|
Adjustments: |
|
|
|
|
Selling, general and administrative expenses |
|
|
(71,199 |
) |
|
|
(69,934 |
) |
Costs on exited brands |
|
|
- |
|
|
|
869 |
|
Costs of streamlining and consolidation of operations, and
other strategic initiatives |
|
|
- |
|
|
|
54 |
|
|
|
|
|
|
|
EBITDA, as
adjusted |
|
$ |
19,889 |
|
|
$ |
26,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
242,090 |
|
|
$ |
261,294 |
|
|
|
|
|
|
|
EBITDA
margin percentage of revenues |
|
|
8.2 |
% |
|
|
10.0 |
% |
|
|
|
|
(1 |
) |
Adjusted EBITDA consists of income before interest, taxes,
depreciation, amortization, costs on exited brands, costs of
streamlining and consolidation of operations, legal settlement, and
other strategic initiatives. Adjusted 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. Adjusted EBITDA is presented solely as a
supplemental disclosure because management believes that it is a
common measure of operating performance in the apparel industry. In
addition, we present adjusted EBITDA because we believe it assists
investors and analysts in comparing our performance across periods
on a consistent basis by excluding items that we do not believe are
indicators of our core operating performance. |
Contact:
Annette Ramos, Investor Relations
305-873-1488
Annette.ramos@pery.com
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