- Revenue from continuing operations
increased 22 percent (up 17 percent currency neutral) to $3.0
billion; revenue from continuing operations increased 12 percent
(up 8 percent currency neutral) excluding the revenue contribution
from the Williamson-Dickie acquisition;
- Outdoor & Action Sports revenue
increased 19 percent (up 13 percent currency neutral); Vans®
brand revenue increased 45 percent (up 39 percent currency
neutral) and The North Face® brand revenue increased 11
percent (up 7 percent currency neutral);
- International revenue increased 27
percent (up 16 percent currency neutral), including an 8-percentage
point revenue growth contribution from the Williamson-Dickie
acquisition;
- Direct-to-consumer revenue increased
34 percent (up 29 percent currency neutral), including a
5-percentage point revenue growth contribution from the
Williamson-Dickie acquisition; Digital revenue increased 61 percent
(up 54 percent currency neutral), including a 13-percentage point
revenue growth contribution from the Williamson-Dickie
acquisition;
- Gross margin from continuing
operations increased 20 basis points to 50.5 percent; on an
adjusted basis, gross margin increased 50 basis points (up 20 basis
points currency neutral) to 50.8 percent; excluding the impact of
the Williamson-Dickie acquisition, on an adjusted basis, gross
margin increased 160 basis points (up 140 basis points currency
neutral) to 51.9 percent;
- Earnings per share from continuing
operations was $0.65. Adjusted earnings per share from continuing
operations increased 30 percent (up 22 percent currency neutral) to
$0.67, including a $0.03 contribution from the Williamson-Dickie
acquisition;
- Full year fiscal 2019 revenue is
expected to be in the range of $13.45 billion to $13.55 billion,
reflecting growth of approximately 9 percent to 10 percent;
and,
- Full year fiscal 2019 adjusted
earnings per share is expected to be in the range of $3.48 to
$3.53, reflecting growth between 11 percent and 13
percent.
VF Corporation (NYSE: VFC) today reported financial results for
its three-month transition period ended March 31, 2018. As
previously disclosed, VF's Board of Directors authorized a change
in the company's fiscal year end to the Saturday closest to March
31 from the Saturday closest to December 31. As a result,
throughout this press release, we refer to the three-month period
ended March 31, 2018 as the “transition period.” All per share
amounts are presented on a diluted basis. This release refers to
“reported” and “currency neutral” amounts, terms that are described
under the heading “Currency Neutral - Excluding the Impact of
Foreign Currency.” Unless otherwise noted, “reported” and “currency
neutral” amounts are the same. This release also refers to
“continuing” and “discontinued” operations amounts, which are
concepts described under the heading “Discontinued Operations -
Nautica® Brand Business and Licensing Business.” Unless otherwise
noted, results presented are based on continuing operations. This
release also refers to “adjusted” amounts, terms that are described
under the heading “Adjusted Amounts - Excluding Williamson-Dickie,
Icebreaker® and Altra® Transaction and Deal Related Expenses and
the Provisional Impact of U.S. Tax Legislation.” Unless otherwise
noted, “reported” and “adjusted” amounts are the same.
“VF's transition period results were strong as the broad-based
growth acceleration that began in the second half of 2017
continued,” said Steve Rendle, Chairman, President and Chief
Executive Officer. “Our core growth engines are driving strong
global momentum as we begin to enter the acceleration phase of our
2021 strategy. VF is in the midst of a transformation to become a
purpose-led, consumer-centric organization. We are evolving and
adapting to a rapidly changing marketplace and remain committed to
delivering top quartile returns for our shareholders.”
Currency Neutral - Excluding the Impact of Foreign
Currency
This release refers to “reported” amounts in accordance with
U.S. generally accepted accounting principles (“GAAP”), which
include translation and transactional impacts from foreign currency
exchange rates. This release also refers to “currency neutral”
amounts, which exclude both the impact of translating foreign
currencies into U.S. dollars and the impact of currency rate
changes on foreign currency denominated transactions.
Reconciliations of GAAP measures to currency neutral amounts are
presented in the supplemental financial information included with
this release, which identifies and quantifies all excluded items,
and provides management’s view of why this information is useful to
investors.
Discontinued Operations - Nautica® Brand Business and
Licensing Business
On March 19, 2018, the company announced it had reached an
agreement to sell its Nautica® brand business to Authentic Brands
Group (ABG), LLC. and the sale was completed on April 30, 2018.
Accordingly, the company has classified the assets and liabilities
of the Nautica® brand business as held-for-sale and has included
the operating results of this business in discontinued operations
for all periods presented.
On April 28, 2017, the company completed the sale of its
Licensed Sports Group (LSG) business, including the Majestic®
brand. In conjunction with the LSG divestiture, VF executed its
plan to entirely exit the licensing business and completed the sale
of the assets of the JanSport® brand collegiate business in the
fourth quarter of 2017. Accordingly, the company has removed the
assets and liabilities of the licensing business as of the dates
noted above and included the operating results of these businesses
in discontinued operations for all periods presented.
The company’s after-tax net loss from discontinued operations
was approximately $8 million in the transition period, which
includes an increase in the estimated loss on the sale of the
Nautica® brand business recorded in the fourth quarter of 2017, and
the operating results of the Nautica® brand business during the
transition period.
Adjusted Amounts - Excluding Williamson-Dickie,
Icebreaker® and Altra® Transaction and Deal Related
Expenses and the Provisional Impact of U.S. Tax Legislation
This release refers to adjusted amounts that exclude transaction
and deal related expenses associated with the acquisitions of
Williamson-Dickie, Icebreaker® and Altra®. Total transaction and
deal related expenses were approximately $14 million in the
transition period.
Adjusted amounts in this release also exclude the provisional
amounts recorded due to recent U.S. tax legislation. On December
22, 2017, the U.S. government enacted comprehensive tax legislation
commonly referred to as the Tax Cuts and Jobs Act ("Tax Act"). The
Tax Act reduces the federal tax rate on U.S. earnings to 21 percent
and moves from a global taxation regime to a modified territorial
regime. As part of the legislation, U.S. companies are required to
pay tax on historical earnings generated offshore that have not
been repatriated to the U.S. Additionally, revaluation of deferred
tax asset and liability positions at the lower federal base rate of
21 percent is also required. The transitional impact of the Tax Act
resulted in a provisional net charge of approximately $465 million
for the fourth quarter of 2017, which was further adjusted by a $5
million benefit in the transition period.
Combined, the above net charges negatively impacted earnings per
share by $0.02 during the transition period. All adjusted amounts
referenced herein exclude the effects of these amounts.
Reconciliations of measures calculated in accordance with GAAP
to adjusted amounts are presented in the supplemental financial
information included with this release, which identifies and
quantifies all excluded items, and provides management’s view of
why this information is useful to investors.
Transition Period Income Statement Review
- Revenue increased 22 percent (up
17 percent currency neutral) to $3.0 billion, including a $233
million revenue contribution from the Williamson-Dickie
acquisition. Excluding the Williamson-Dickie acquisition, revenue
increased 12 percent (up 8 percent currency neutral), driven by
broad-based strength across VF’s international and
direct-to-consumer platforms and Outdoor & Action Sports
coalition.
- Gross margin improved 20 basis
points to 50.5 percent, as benefits from a mix-shift toward higher
margin businesses and changes in foreign currency were partially
offset by the impact of the Williamson-Dickie acquisition. On an
adjusted basis, gross margin increased 50 basis points to 50.8
percent. Excluding the impact of the Williamson-Dickie acquisition,
adjusted gross margin increased 160 basis points to 51.9 percent.
Changes in foreign currency positively impacted gross margin by 20
basis points on a reported basis.
- Operating income on a reported
basis was $311 million. On an adjusted basis, operating income
increased 14 percent to $330 million, including a $16 million
contribution from the Williamson-Dickie acquisition. Operating
margin on a reported basis decreased 140 basis points to 10.2
percent. Adjusted operating margin declined 80 basis points to 10.8
percent. Adjusted operating margin, excluding the Williamson-Dickie
acquisition, declined 40 basis points to 11.2 percent. Changes in
foreign currency positively impacted operating margin by 20 basis
points on a reported basis.
- Earnings per share was $0.65 on
a reported basis. On an adjusted basis, earnings per share
increased 30 percent (22 percent currency neutral) to $0.67,
including a $0.03 contribution from the Williamson-Dickie
acquisition.
Balance Sheet and Cash Flow Highlights
Inventories were up 17 percent compared with the same period in
2017. Excluding the impact of the Williamson-Dickie acquisition,
inventories increased less than 2 percent. During the transition
period, VF repurchased approximately 3 million shares for $250
million. The company has $4 billion remaining under its current
share repurchase authorization.
Full Year Fiscal 2019 Outlook
VF’s full year fiscal 2019 outlook includes the following:
- Revenue is expected to be in the
range of $13.45 billion to $13.55 billion, reflecting growth of
approximately 9 percent to 10 percent. By coalition, revenue for
Outdoor & Action Sports is expected to increase 8
percent to 10 percent; revenue for Jeanswear is expected to
be about flat compared to prior year; and Imagewear revenue
is expected to increase more than 35 percent.
- International revenue is
expected to increase 13 percent to 15 percent. By geographic
region, European revenue is expected to increase 13 percent to 15
percent. In the Asia Pacific region, revenue is expected to
increase 15 percent to 17 percent. And, in the Americas (non-U.S.)
region, revenue is expected to increase 10 percent to 12
percent.
- Direct-to-consumer revenue is
expected to increase 8 percent to 10 percent, including more than
25 percent growth in digital.
- Gross margin is expected to be
about 51 percent.
- Operating margin is expected to
increase 50 basis points to about 13.2 percent.
- Adjusted earnings per share is
expected to be in the range of $3.48 to $3.53, reflecting growth
between 11 percent and 13 percent.
- Cash flow from operations is
expected to exceed $1.6 billion.
- Other full year assumptions include an
effective tax rate of approximately 17 percent and
capital expenditures of approximately $275 million.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.46
per share, payable on June 18, 2018 to shareholders of record on
June 8, 2018.
Webcast Information
VF will host its transition period conference call beginning at
8:30 a.m. Eastern Time today. The conference call will be broadcast
live via the internet, accessible at ir.vfc.com. For those unable
to listen to the live broadcast, an archived version will be
available at the same location.
About VF
VF Corporation (NYSE: VFC) outfits consumers around the world
with its diverse portfolio of iconic lifestyle brands, including
Vans®, The North Face®, Timberland®, Wrangler® and Lee®.
Founded in 1899, VF is one of the world’s largest apparel, footwear
and accessories companies with socially and environmentally
responsible operations spanning numerous geographies, product
categories and distribution channels. VF is committed to delivering
innovative products to consumers and creating long-term value for
its customers and shareholders. For more information,
visit www.vfc.com.
Forward-looking Statements
Certain statements included in this release and attachments are
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are made based on our
expectations and beliefs concerning future events impacting VF and
therefore involve several risks and uncertainties. You can identify
these statements by the fact that they use words such as “will,”
“anticipate,” “estimate,” “expect,” “should,” and “may” and other
words and terms of similar meaning or use of future dates. We
caution that forward-looking statements are not guarantees and that
actual results could differ materially from those expressed or
implied in the forward-looking statements. Potential risks and
uncertainties that could cause the actual results of operations or
financial condition of VF to differ materially from those expressed
or implied by forward-looking statements in this release include,
but are not limited to: foreign currency fluctuations; the level of
consumer demand for apparel, footwear and accessories; disruption
to VF’s distribution system; VF's reliance on a small number of
large customers; the financial strength of VF's customers;
fluctuations in the price, availability and quality of raw
materials and contracted products; disruption and volatility in the
global capital and credit markets; VF's response to changing
fashion trends, evolving consumer preferences and changing patterns
of consumer behavior, intense competition from online retailers,
manufacturing and product innovation; increasing pressure on
margins; VF's ability to implement its business strategy; VF's
ability to grow its international and direct-to-consumer
businesses; VF’s and its customers’ and vendors’ ability to
maintain the strength and security of information technology
systems; stability of VF's manufacturing facilities and foreign
suppliers; continued use by VF's suppliers of ethical business
practices; VF’s ability to accurately forecast demand for products;
continuity of members of VF’s management; VF's ability to protect
trademarks and other intellectual property rights; possible
goodwill and other asset impairment; maintenance by VF’s licensees
and distributors of the value of VF’s brands; VF's ability to
execute and integrate acquisitions; changes in tax laws and
liabilities; legal, regulatory, political and economic risks; and
adverse or unexpected weather conditions. More information on
potential factors that could affect VF's financial results is
included from time to time in VF's public reports filed with the
Securities and Exchange Commission, including VF's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q.
VF CORPORATION Condensed Consolidated
Statements of Income (Unaudited) (In thousands,
except per share amounts) Three Months Ended
March % 2018 2017 Change
Net sales $ 3,022,922 $ 2,483,896 22 %
Royalty income
22,524 16,444 37 %
Total revenues 3,045,446
2,500,340 22 %
Costs and operating expenses
Cost of goods sold 1,506,335 1,243,605 21 % Selling, general and
administrative expenses 1,227,752 967,082 27 % Total
costs and operating expenses 2,734,087 2,210,687 24 %
Operating income 311,359 289,653 7 %
Interest, net
(21,165 ) (20,188 ) 5 %
Other (expense) income, net 3,939
(68 )
*
Income from continuing operations before income taxes
294,133 269,397 9 %
Income taxes 32,969 56,121
(41 )%
Income (loss) from continuing operations 261,164
213,276 22 %
Income (loss) from discontinued operations, net of
tax (8,371 ) (4,113 )
*
Net income (loss) $ 252,793 $ 209,163 21 %
Earnings (loss) per common share - basic (a)
Continuing operations $ 0.66 $ 0.52 28 % Discontinued operations
(0.02 ) (0.01 )
*
Total earnings per common share - basic $ 0.64 $ 0.51
26 %
Earnings (loss) per common share - diluted
(a) Continuing operations $ 0.65 $ 0.51 27 % Discontinued
operations (0.02 ) (0.01 )
*
Total earnings per common share - diluted $ 0.63 $
0.50 25 %
Weighted average shares outstanding Basic
395,253 411,990 Diluted 401,276 415,960
Cash dividends per
common share $ 0.46 $ 0.42 10 % * Calculation not
meaningful
Basis of presentation of condensed
consolidated financial statements: VF operates and reports
using a 52/53 week fiscal year ending on the Saturday closest to
March 31 of each year, which was recently changed from the Saturday
closest to December 31 of each year. For presentation purposes
herein, all references to periods ended March 2018, December 2017
and March 2017 relate to the 13-week transition period ended March
31, 2018, the 52-week fiscal period ended December 30, 2017 and the
13-week fiscal period ended April 1, 2017. (a) Amounts have
been calculated using unrounded numbers.
VF CORPORATION Condensed
Consolidated Balance Sheets (Unaudited) (In
thousands) March December March
2018 2017 2017 ASSETS Current
assets Cash and equivalents $ 680,762 $ 563,483 $ 603,262
Accounts receivable, net 1,408,587 1,429,986 1,241,496 Inventories
1,861,441 1,706,609 1,593,434 Other current assets 732,533
677,686 653,958 Total current assets 4,683,323 4,377,764
4,092,150
Property, plant and equipment 1,011,617
1,014,638 897,445
Intangible assets 2,120,110 2,089,781
1,548,753
Goodwill 1,693,219 1,692,644 1,561,465
Other
assets 803,041 783,675 1,146,465
Total
assets $ 10,311,310 $ 9,958,502 $ 9,246,278
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Short-term borrowings $ 1,525,106 $ 729,384 $
288,677 Current portion of long-term debt 6,265 6,165 253,736
Accounts payable 583,004 760,997 425,892 Accrued liabilities
1,024,454 1,247,554 867,554 Total current liabilities
3,138,829 2,744,100 1,835,859
Long-term debt
2,212,555 2,187,789 2,051,482
Other liabilities 1,271,830
1,306,713 985,880
Total liabilities 6,623,214
6,238,602 4,873,221
Stockholders'
equity 3,688,096 3,719,900 4,373,057
Total
liabilities and stockholders' equity $ 10,311,310 $
9,958,502 $ 9,246,278
VF CORPORATION Condensed Consolidated Statements
of Cash Flows (Unaudited) (In thousands)
Three Months Ended March 2018 (a)
2017 (a) Operating activities Net income $
252,793 $ 209,163 Depreciation and amortization 71,532 66,438 Other
adjustments (567,548 ) (485,763 ) Cash used by operating activities
(243,223 ) (210,162 )
Investing activities Capital
expenditures (54,374 ) (40,856 ) Software purchases (19,289 )
(20,657 ) Other, net 17,673 (6,824 ) Cash used by investing
activities (55,990 ) (68,337 )
Financing activities
Net proceeds from short-term borrowings, long-term debt and other
794,424 261,252 Purchases of treasury stock (250,282 ) (438,297 )
Cash dividends paid (181,373 ) (172,713 ) Proceeds from issuance of
Common Stock, net of shares withheld for taxes 44,017 3,283
Cash provided (used) by financing activities 406,786
(346,475 )
Effect of foreign currency rate changes on cash, cash
equivalents and restricted cash 12,220 2,228
Net change in cash, cash equivalents and restricted cash
119,793 (622,746 )
Cash, cash equivalents and restricted cash -
beginning of year 569,397 1,231,026
Cash, cash
equivalents and restricted cash - end of period $ 689,190
$ 608,280 (a) The cash flows related to
discontinued operations have not been segregated, and are included
in the Condensed Consolidated Statements of Cash Flows.
VF CORPORATION Supplemental
Financial Information Business Segment Information
(Unaudited) (In thousands) Three Months
Ended March
% Change Currency Neutral
(a)
2018 2017 % Change Coalition
revenues Outdoor & Action Sports $ 2,014,574 $ 1,695,790 19
% 13 % Jeanswear 639,547 647,442 (1 )% (4 )% Imagewear 371,040
134,966 175 % 175 % Other 20,285 22,142 (8 )% (8 )%
Total coalition revenues $ 3,045,446 $ 2,500,340 22 %
17 %
Coalition profit (loss) Outdoor & Action Sports $
292,295 $ 232,452 26 % 20 % Jeanswear 109,206 118,019 (7 )% (14 )%
Imagewear 24,570 24,400 1 % (4 )% Other (3,023 ) (2,195 ) (38 )%
(38 )% Total coalition profit 423,048 372,676 14 % 8 %
Corporate
and other expenses (107,750 ) (83,091 ) 30 % 29 %
Interest,
net (21,165 ) (20,188 ) 5 % 5 %
Income from continuing
operations before income taxes $ 294,133 $ 269,397
9 % 2 % (a) Refer to currency neutral definition on
the following pages. * Calculation not meaningful
VF CORPORATION Supplemental Financial
Information Business Segment Information – Currency Neutral
Basis (Unaudited) (In thousands) Three
Months Ended March 2018 As Reported Adjust for
Foreign under GAAP Currency Exchange
Currency Neutral Coalition revenues Outdoor &
Action Sports $ 2,014,574 $ (99,991 ) $ 1,914,583 Jeanswear 639,547
(19,985 ) 619,562 Imagewear 371,040 (442 ) 370,598 Other 20,285
— 20,285 Total coalition revenues $ 3,045,446
$ (120,418 ) $ 2,925,028
Coalition profit
(loss) Outdoor & Action Sports $ 292,295 $ (12,336 ) $
279,959 Jeanswear 109,206 (7,198 ) 102,008 Imagewear 24,570 (1,101
) 23,469 Other (3,023 ) — (3,023 ) Total coalition profit
423,048 (20,635 ) 402,413
Corporate and other expenses
(107,750 ) 651 (107,099 )
Interest, net (21,165 ) —
(21,165 )
Income from continuing operations before income
taxes $ 294,133 $ (19,984 ) $ 274,149
Diluted
earnings per share growth 27 % (8 )% 19 %
Currency
Neutral Financial Information VF is a global company
that reports financial information in U.S. dollars in accordance
with GAAP. Foreign currency exchange rate fluctuations affect the
amounts reported by VF from translating its foreign revenues and
expenses into U.S. dollars, and from entering foreign currency
transactions. These rate fluctuations can have a significant effect
on reported operating results. As a supplement to our reported
operating results, we present currency neutral financial
information, which is a non-GAAP financial measure that excludes
both the impact of translating foreign currencies into U.S. dollars
and the impact of currency rate changes on foreign currency
denominated transactions. We use currency neutral information to
provide a framework to assess how our business performed excluding
the effects of changes in the rates used to calculate foreign
currency translation, and transaction gains and losses. Management
believes this information is useful to investors to facilitate
comparison of operating results and better identify trends in our
businesses. To calculate foreign currency translation on a
currency neutral basis, operating results for the current year
period for entities reporting in currencies other than the U.S.
dollar are translated into U.S. dollars at the average exchange
rates in effect during the comparable period of the prior year
(rather than the actual exchange rates in effect during the current
year period). Similarly, transaction gains and losses on a currency
neutral basis are calculated using exchange rates from the
comparable period of the prior year. These currency neutral
performance measures should be viewed in addition to, and not in
lieu of or superior to, our operating performance measures
calculated in accordance with GAAP. The currency neutral
information presented may not be comparable to similarly titled
measures reported by other companies.
VF CORPORATION
Supplemental Financial Information Top 5 Brand Revenue
Information (Unaudited) Three Months Ended
March 2018 Top 5 Brand Revenue Growth Americas
EMEA
APAC
Global Vans®
% change
45% 53% 32% 45%
% change currency
neutral*
44% 36% 24% 39%
The North Face®
% change
4% 31% 0% 11%
% change currency
neutral*
3% 19% (5)% 7%
Timberland®
% change
(6)% 17% 9% 5%
% change currency
neutral*
(7)% 4% 2% (1)%
Wrangler®
% change
1% 16% 0% 3%
% change currency
neutral*
1% 2% (7)% 1%
Lee®
% change
(13)% 12% (4)% (6)%
% change currency
neutral*
(13)% (1)% (11)% (11)% *Refer to currency neutral definition
on previous pages.
VF CORPORATION Supplemental Financial
Information Geographic and Channel Revenue Information
(Unaudited) Three Months Ended March 2018 %
Change
% Change Currency
Neutral*
% Change Currency Neutral and
Excluding Williamson-Dickie*(a)
Geographic
Revenue Growth
U.S. 18% 18% 8% EMEA 33% 19% 12% APAC
17% 10% 2% China 19% 11% 1% Americas (non-U.S.) 22% 17% 1%
International 27% 16% 8%
Three Months Ended March 2018 % Change
% Change Currency
Neutral*
% Change Currency Neutral and
Excluding Williamson-Dickie*(a)
Channel Revenue
Growth
Wholesale 17% 12% 1%
Direct-to-Consumer 34% 29% 24%
As of March 2018 (b) 2017
DTC Store
Count
Total 1,483 1,433 *Refer to currency
neutral definition on previous pages. (a) Refer to Non-GAAP
financial information on "Reconciliation of Select GAAP to Non-GAAP
Measures - Trailing Twelve Months Ended March 31, 2018" page.
(b) The 2018 DTC store count includes 81 Williamson-Dickie
stores.
VF CORPORATION
Supplemental Financial Information Reconciliation of
Select GAAP to Non-GAAP Measures - Trailing Twelve Months Ended
March 31, 2018 (Unaudited) (In thousands, except per
share amounts)
Three Months EndedJuly 1,
2017
Three Months
EndedSeptember 30, 2017
Three Months
EndedDecember 30, 2017
Three Months EndedMarch
31, 2018
Trailing TwelveMonths Ended
March 31, 2018
Total revenues - Reported GAAP $ 2,268,620 $ 3,392,934 $ 3,649,283
$ 3,045,446 $ 12,356,283 Contribution from Williamson-Dickie (a) —
— (247,247 ) (233,138 ) (480,385 ) Organic total
revenues - Non-GAAP $ 2,268,620 $ 3,392,934 $
3,402,036 $ 2,812,308 $ 11,875,898
Gross profit - Reported GAAP $ 1,126,144 $ 1,703,893 $ 1,879,464 $
1,539,111 $ 6,248,612 Transaction and deal related costs (b) —
— 3,635 6,492 10,127 Adjusted
gross profit - Non-GAAP 1,126,144 1,703,893 1,883,099 1,545,603
6,258,739 Contribution from Williamson-Dickie (a) — —
(101,546 ) (86,428 ) (187,974 ) Adjusted organic gross profit -
Non-GAAP $ 1,126,144 $ 1,703,893 $ 1,781,553 $
1,459,175 $ 6,070,765 Operating income -
Reported GAAP $ 158,117 $ 573,949 $ 481,371 $ 311,359 $ 1,524,796
Transaction and deal related costs (b) — 4,890 20,976
18,604 44,470 Adjusted operating income -
Non-GAAP 158,117 578,839 502,347 329,963 1,569,266 Contribution
from Williamson-Dickie (a) — — (18,721 ) (15,937 )
(34,658 ) Adjusted organic operating income - Non-GAAP $ 158,117
$ 578,839 $ 483,626 $ 314,026 $
1,534,608 Diluted earnings (loss) per share from
continuing operations (d) $ 0.27 $ 1.19 $ (0.18 ) $ 0.65 $ 1.92 *
Transaction and deal related costs (b) — 0.01 0.03 0.03 0.07 Impact
of Tax Act (c) — — 1.16 (0.01 ) 1.15
Adjusted diluted earnings per share from continuing operations (d)
$ 0.27 $ 1.20 $ 1.01 $ 0.67 $ 3.14 Contribution from
Williamson-Dickie (a) — — (0.04 ) (0.03 ) (0.07 )
Adjusted organic diluted earnings per share from continuing
operations (d) $ 0.27 $ 1.20 $ 0.98 $ 0.63
$ 3.08 Weighted average common shares
outstanding - diluted 400,512 397,384 400,378 401,276 399,888 *
* Recalculated on a trailing twelve-month basis for the
period ended March 31, 2018. (a) The contribution from
Williamson-Dickie represents its operating results, excluding
transaction and deal related costs, beginning on the acquisition
date of October 2, 2017. The impact on the diluted earnings (loss)
per share from continuing operations was calculated using a tax
rate of 17% and 20% for the three-month periods ended March 31,
2018 and December 30, 2017, respectively. The diluted earnings per
share calculation is based on the weighted average common shares
outstanding for the respective periods. The contribution from
Williamson-Dickie has been reflected in VF's Imagewear coalition
for segment reporting purposes since the acquisition date.
(b) Transaction and deal related costs include acquisition and
integration costs related to the acquisitions of Williamson-Dickie
Mfg. Co. ("Williamson-Dickie"), Icebreaker Holdings Limited
("Icebreaker") and Altra® brand, additional cost of goods sold
recognized by Williamson-Dickie due to fair value inventory
adjustments calculated as part of the purchase price accounting and
a non-operating net benefit from hedging the purchase price of
Icebreaker. The transaction and deal related costs resulted in net
tax benefits of $3.3 million, $2.0 million and $1.6 million for the
three-month periods ended March 31, 2018, December 30, 2017, and
September 30, 2017, respectively. The diluted earnings per share
impact was calculated using the weighted average common shares
outstanding for the respective periods. Transaction and deal
related costs associated with the Williamson-Dickie acquisition of
$11.4 million and $6.9 million have been reported in VF's Imagewear
coalition for segment reporting purposes in each of the three-month
periods ended March 31, 2018 and December 30, 2017, respectively.
The remaining transaction and deal related costs have been reported
as corporate expenses. (c) On December 22, 2017, the U.S.
government enacted comprehensive tax legislation commonly referred
to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act reduced
the federal tax rate on U.S. earnings to 21% and moved from a
global taxation regime to a modified territorial regime. As part of
the legislation, U.S. companies are required to pay a tax on
historical earnings generated offshore that have not been
repatriated to the U.S. Additionally, revaluation of deferred tax
asset and liability positions at the lower federal base rate of 21%
is also required. The transitional impact of the Tax Act resulted
in a provisional net charge of $465.5 million for the three months
ended December 30, 2017. Measurement period adjustments related to
the provisional net charge were recorded during the three months
ended March 31, 2018, resulting in a tax benefit of $5.1 million.
The diluted earnings per share impact was calculated using the
weighted average common shares outstanding for the respective
periods. (d) Amounts shown in the table have been calculated
using unrounded numbers.
Non-GAAP Financial
Information In connection with a change in fiscal year
end to the Saturday closest to March 31 from the Saturday closest
to December 31, VF is reporting a transition quarter from December
31, 2017 through March 31, 2018. VF's next fiscal year will run
from April 1, 2018 through March 30, 2019 (“Fiscal 2019”).
The financial metrics provided for the trailing twelve months ended
March 31, 2018 are non-GAAP measures and have been presented in
order to provide a comparison that aligns with VF's new fiscal year
end. The quarterly and trailing twelve month financial
information has also been presented on an adjusted basis, which
excludes the impact of tax reform and transaction and deal related
costs, and on an adjusted organic basis, which excludes the
operating results of Williamson-Dickie beginning on the acquisition
date of October 2, 2017. These adjusted presentations are non-GAAP
measures. Management believes these measures provide investors with
useful supplemental information regarding VF's underlying business
trends and the performance of VF's ongoing operations and are
useful for period-over-period comparisons of such operations.
Management uses the above financial measures internally in
its budgeting and review process and, in some cases, as a factor in
determining compensation. While management believes that these
non-GAAP financial measures are useful in evaluating the business,
this information should be considered as supplemental in nature and
should be viewed in addition to, and not in lieu of or superior to,
VF's operating performance measures calculated in accordance with
GAAP. In addition, these non-GAAP financial measures may not be the
same as similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial Information Reconciliation of
Select GAAP to Non-GAAP Measures - Trailing Twelve Months Ended
April 1, 2017 (Unaudited) (In thousands, except per
share amounts)
Three Months EndedJuly 2,
2016
Three Months EndedOctober
1, 2016
Three Months
EndedDecember 31, 2016
Three Months EndedApril
1, 2017
Trailing TwelveMonths Ended
April 1, 2017
Total revenues - Reported GAAP $ 2,231,203 $ 3,218,833 $ 3,037,543
$ 2,500,340 $ 10,987,919 Gross profit - Reported GAAP $
1,090,241 $ 1,584,242 $ 1,524,456 $ 1,256,735 $ 5,455,674
Restructuring charges (a) — — 23,275 —
23,275 Adjusted gross profit - Non-GAAP $ 1,090,241 $
1,584,242 $ 1,547,731 $ 1,256,735 $ 5,478,949
Operating income - Reported GAAP $ 186,252 $ 594,849
$ 282,426 $ 289,653 $ 1,353,180 Goodwill and intangible asset
impairment charges (a) — — 79,644 — 79,644 Restructuring charges
(a) — — 55,019 — 55,019 Pension settlement charge (a) — —
50,922 — 50,922 Adjusted operating
income - Non-GAAP $ 186,252 $ 594,849 $ 468,011
$ 289,653 $ 1,538,765 Diluted earnings
per share from continuing operations (b) $ 0.31 $ 1.13 $ 0.57 $
0.51 $ 2.52 * Goodwill and intangible asset impairment charges (a)
— — 0.15 — 0.15 Restructuring charges (a) — — 0.10 — 0.10 Pension
settlement charge (a) — — 0.08 — 0.08
Adjusted diluted earnings per share from continuing
operations (b) $ 0.31 $ 1.13 $ 0.90 $ 0.51
$ 2.85 Weighted average common shares
outstanding - diluted 422,059 419,240 417,891 415,960 418,787 *
* Recalculated on a trailing twelve-month basis for the
period ended April 1, 2017. (a) Goodwill and intangible
asset impairment charges, restructuring charges and the pension
settlement charge resulted in net tax benefits of $15.5 million,
$13.3 million and $19.5 million, respectively. The diluted earnings
per share impact was calculated using the weighted average common
shares outstanding for the respective periods. Restructuring
charges of $18.1 million were reported in VF's Outdoor & Action
Sports coalition, $20.4 million were reported in VF's Jeanswear
coalition, $1.3 million were reported in VF's Imagewear coalition
and $1.3 million were reported in Other for segment reporting
purposes for the three months ended December 31, 2016. The
remaining costs have been reported separately or as corporate
expenses. (b) Amounts shown in the table have been
calculated using unrounded numbers.
Non-GAAP Financial
Information In connection with a change in fiscal year
end to the Saturday closest to March 31 from the Saturday closest
to December 31, VF reported a transition quarter from December 31,
2017 through March 31, 2018. VF's next fiscal year will run from
April 1, 2018 through March 30, 2019 (“Fiscal 2019”). The
quarterly financial information above has been presented on a GAAP
basis. The trailing twelve months ended April 1, 2017 is a non-GAAP
measure and has been presented in order to provide a comparison
that aligns with VF's new fiscal year end. The quarterly and
trailing twelve month financial information has also been presented
on an adjusted basis, which excludes the impact of impairment
charges for goodwill and intangible assets, restructuring charges
and a pension settlement charge. These adjusted presentations are
non-GAAP measures. Management believes these measures provide
investors with useful supplemental information regarding VF's
underlying business trends and the performance of VF's ongoing
operations and are useful for period-over-period comparisons of
such operations. Management uses the above financial
measures internally in its budgeting and review process and, in
some cases, as a factor in determining compensation. While
management believes that these non-GAAP financial measures are
useful in evaluating the business, this information should be
considered as supplemental in nature and should be viewed in
addition to, and not in lieu of or superior to, VF's operating
performance measures calculated in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial Information Business Segments
Information - Trailing Twelve Months Ended March 31, 2018 and April
1, 2017 (Unaudited) (In thousands, except per share
amounts) Three Months EndedJuly 1, 2017
Three Months EndedSeptember 30, 2017 Three Months
EndedDecember 30, 2017 Three Months EndedMarch
31, 2018 Trailing TwelveMonths Ended March 31,
2018 Coalition revenues Outdoor & Action Sports (a)
$ 1,489,485 $ 2,526,978 $ 2,500,203 $ 2,014,574 $ 8,531,240
Jeanswear 600,807 697,701 709,411 639,547 2,647,466 Imagewear
150,008 138,885 406,356 371,040 1,066,289 Other 28,320
29,370 33,313 20,285 111,288 Total
coalition revenues $ 2,268,620 $ 3,392,934 $
3,649,283 $ 3,045,446 $ 12,356,283
Coalition profit (loss) Outdoor & Action Sports (a) $
127,669 $ 531,870 $ 486,303 $ 292,295 $ 1,438,137 Jeanswear 84,757
121,219 97,950 109,206 413,132 Imagewear 25,572 22,377 40,903
24,570 113,422 Other (293 ) (737 ) 139 (3,023 ) (3,914 )
Total coalition profit $ 237,705 $ 674,729 $ 625,295
$ 423,048 $ 1,960,777
Three
Months EndedJuly 2, 2016 Three Months
EndedOctober 1, 2016 Three Months
EndedDecember 31, 2016 Three Months EndedApril
1, 2017 Trailing TwelveMonths Ended April 1,
2017 Coalition revenues Outdoor & Action Sports (a)
$ 1,438,363 $ 2,358,258 $ 2,160,310 $ 1,695,790 $ 7,652,721
Jeanswear 629,180 701,416 696,515 647,442 2,674,553 Imagewear
134,830 127,992 147,175 134,966 544,963 Other 28,830 31,167
33,543 22,142 115,682 Total coalition
revenues $ 2,231,203 $ 3,218,833 $ 3,037,543 $
2,500,340 $ 10,987,919
Coalition profit (loss)
Outdoor & Action Sports (a) $ 125,444 $ 496,746 $ 391,139 $
232,452 $ 1,245,781 Jeanswear 108,843 142,427 103,348 118,019
472,637 Imagewear 24,377 23,981 30,112 24,400 102,870 Other (574 )
(341 ) (1,295 ) (2,195 ) (4,405 ) Total coalition profit $ 258,090
$ 662,813 $ 523,304 $ 372,676 $
1,816,883 (a) The results of Kipling North America,
which were previously included in the Sportswear coalition, have
been included in the Outdoor & Action Sports coalition for all
periods presented.
Non-GAAP Financial Information
In connection with a change in fiscal year end to the
Saturday closest to March 31 from the Saturday closest to December
31, VF is reporting a transition quarter from December 31, 2017
through March 31, 2018. VF's next fiscal year will run from April
1, 2018 through March 30, 2019 (“Fiscal 2019”). The
quarterly financial information above has been presented on a GAAP
basis. The financial metrics provided for the trailing twelve
months ended March 31, 2018 and April 1, 2017 are non-GAAP measures
and have been presented in order to provide a comparison that
aligns with VF's new fiscal year end. Management believes these
measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of
VF's ongoing operations and are useful for period-over-period
comparisons of such operations. Management uses the above
financial measures internally in its budgeting and review process.
While management believes that these non-GAAP financial measures
are useful in evaluating the business, this information should be
considered as supplemental in nature and should be viewed in
addition to, and not in lieu of or superior to, VF's operating
performance measures calculated in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial Information International and DTC
Revenues - Trailing Twelve Months Ended March 31, 2018
(Unaudited) (In thousands) Three Months
EndedJuly 1, 2017 Three Months EndedSeptember
30, 2017 Three Months EndedDecember 30, 2017
Three Months EndedMarch 31, 2018 Trailing
TwelveMonths Ended March 31, 2018 International
revenues $ 829,974 $ 1,541,938 $ 1,402,736 $ 1,403,150 $ 5,177,798
DTC revenues 708,081 903,843 1,436,244 964,364 4,012,532
Non-GAAP Financial Information In connection
with a change in fiscal year end to the Saturday closest to March
31 from the Saturday closest to December 31, VF is reporting a
transition quarter from December 31, 2017 through March 31, 2018.
VF's next fiscal year will run from April 1, 2018 through March 30,
2019 (“Fiscal 2019”). The quarterly financial information
above has been presented on a GAAP basis. The financial metrics
provided for the trailing twelve months ended March 31, 2018 are
non-GAAP measures and have been presented in order to provide a
comparison that aligns with VF's new fiscal year end. Management
believes these measures provide investors with useful supplemental
information regarding VF's underlying business trends and the
performance of VF's ongoing operations and are useful for
period-over-period comparisons of such operations.
Management uses the above financial measures internally in its
budgeting and review process. While management believes that these
non-GAAP financial measures are useful in evaluating the business,
this information should be considered as supplemental in nature and
should be viewed in addition to, and not in lieu of or superior to,
VF's operating performance measures calculated in accordance with
GAAP. In addition, this non-GAAP financial measure may not be the
same as similarly titled measures presented by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180504005040/en/
VF CorporationJoe Alkire,
336-424-7711Vice President, Corporate Development, Investor
Relations andFinancial Planning & AnalysisorCraig Hodges,
336-424-5636Senior Director, Corporate Communications
VF (NYSE:VFC)
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