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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Wolverine World Wide Inc | NYSE:WWW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.14 | -1.29% | 10.75 | 11.15 | 10.63 | 11.12 | 1,180,902 | 01:00:00 |
WOLVERINE WORLD WIDE, INC. |
(Exact name of registrant as specified in its charter) |
Delaware | 001-06024 | 38-1185150 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
9341 Courtland Drive N.E., Rockford, Michigan | 49351 | |
(Address of principal executive offices) | (Zip Code) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits: |
99.1 | Press Release dated July 21, 2015. This Exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. |
Dated: July 21, 2015 | WOLVERINE WORLD WIDE, INC. (Registrant) |
/s/ Brendan M. Gibbons | |
Brendan M. Gibbons | |
Vice President, General Counsel and Secretary |
Exhibit Number | Document | |
99.1 | Wolverine World Wide, Inc. Press Release dated July 21, 2015. |
9341 Courtland Drive NE, Rockford, MI 49351 Phone (616) 866-5500; Fax (616) 866-0257 |
• | Consolidated revenue increased to a record $630.1 million, representing growth of 2.7% versus the prior year and 4.9% on a constant currency basis. Adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement, adjusted revenue grew 6.9% versus the prior year. Other highlights include: |
▪ | Growth of 12.2% from the Heritage Group (14.6% in constant currency) and growth of 5.7% from the Performance Group (9.4% in constant currency). |
▪ | U.S. wholesale revenue growth in the mid-single digits. |
▪ | Planned retail store closures and termination of the Patagonia license agreement reduced revenue $11.6 million versus the prior year. |
• | Gross margin was 39.1%, a decrease of 100 basis points versus the prior year's gross margin, in line with Company expectations. |
• | Adjusted operating margin decreased 90 basis points versus the prior year to 8.1%, due primarily to higher pension expense and planned incremental brand investment. Reported operating margin declined 40 basis points versus the prior year to 7.6%. |
• | Adjusted diluted earnings per share were $0.27, compared to an adjusted $0.31 per share in the prior year, and well ahead of Company expectations for the quarter. Reported diluted earnings per share were $0.24, compared to $0.27 per share in the prior year. |
• | Cash and cash equivalents were $220.7 million and net debt was $612.4 million, a reduction of $286.5 million from the same period last year. |
• | The Company repurchased $5.9 million of its common stock in the quarter at an average price of $29.93 per share. |
• | In July 2014, the Company announced a Strategic Realignment Plan for its consumer-direct operations. As part of this effort, the Company announced plans to close approximately 140 stores by the end of fiscal 2015. Today, the Company is announcing that total closures by year end are expected to number approximately 120, and that approximately 55 additional under-performing stores are expected to be closed over the next five years at their natural lease expiration. |
• | Also, as part of the Strategic Realignment Plan, the Company is consolidating offices and infrastructure in Canada to streamline operations, further realize synergies and drive growth in this important market. This initiative was launched this past quarter and is expected to conclude by mid 2016. |
• | As part of the continuing evaluation of the performance of brands within its portfolio, the Company has decided to wind-down operations for its smallest brand - Cushe - and redeploy talent and resources to other higher-value opportunities. The Company expects to incur $3.5 million of restructuring and impairment costs in fiscal 2015, of which $2.9 million was recorded in Q2 2015. |
• | The Company recently amended and extended its senior secured credit facilities. In addition to increasing the overall size of the Company’s borrowing capacity, the amended credit agreement extends the maturity date of the facilities, lowers the cost of the Company’s debt, and increases flexibility with respect to stock repurchases and other restricted uses of cash. |
• | Consolidated reported revenue is expected in the range of $2.82 billion to $2.85 billion, representing growth in the range of approximately 2% to 3% versus the prior year. Constant currency revenue growth is expected in the range of approximately 5% to 6%. |
• | Adjusted diluted earnings per share is expected in the range of $1.53 to $1.60. Constant currency adjusted diluted earnings per share is expected in the range of $1.68 to $1.75. |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||
June 20, 2015 | June 14, 2014 | June 20, 2015 | June 14, 2014 | ||||||||||||
Revenue | $ | 630.1 | $ | 613.5 | $ | 1,261.5 | $ | 1,241.1 | |||||||
Cost of goods sold | 383.7 | 367.7 | 753.7 | 739.1 | |||||||||||
Restructuring costs | — | 0.1 | — | 0.5 | |||||||||||
Gross profit | 246.4 | 245.7 | 507.8 | 501.5 | |||||||||||
Gross margin | 39.1 | % | 40.1 | % | 40.3 | % | 40.4 | % | |||||||
Selling, general and administrative expenses | 195.1 | 190.8 | 393.9 | 381.3 | |||||||||||
Acquisition-related integration costs | — | 2.5 | — | 4.1 | |||||||||||
Restructuring and impairment costs | 3.7 | 3.4 | 2.7 | 3.4 | |||||||||||
Operating expenses | 198.8 | 196.7 | 396.6 | 388.8 | |||||||||||
Operating expenses as a % of revenue | 31.6 | % | 32.1 | % | 31.4 | % | 31.3 | % | |||||||
Operating profit | 47.6 | 49.0 | 111.2 | 112.7 | |||||||||||
Operating margin | 7.6 | % | 8.0 | % | 8.8 | % | 9.1 | % | |||||||
Interest expense, net | 9.0 | 10.5 | 18.5 | 21.4 | |||||||||||
Other expense, net | 1.8 | — | 0.8 | 0.8 | |||||||||||
10.8 | 10.5 | 19.3 | 22.2 | ||||||||||||
Earnings before income taxes | 36.8 | 38.5 | 91.9 | 90.5 | |||||||||||
Income tax expense | 11.6 | 10.9 | 26.6 | 25.7 | |||||||||||
Effective tax rate | 31.4 | % | 28.2 | % | 28.9 | % | 28.4 | % | |||||||
Net earnings | 25.2 | 27.6 | 65.3 | 64.8 | |||||||||||
Less: net (loss) earnings attributable to noncontrolling interest | (0.1 | ) | 0.1 | (0.1 | ) | 0.2 | |||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 25.3 | $ | 27.5 | $ | 65.4 | $ | 64.6 | |||||||
Diluted earnings per share | $ | 0.24 | $ | 0.27 | $ | 0.63 | $ | 0.64 | |||||||
Supplemental information: | |||||||||||||||
Net earnings used to calculate diluted earnings per share | $ | 24.9 | $ | 27.1 | $ | 64.3 | $ | 63.5 | |||||||
Shares used to calculate earnings per share | 101.6 | 100.0 | 101.3 | 99.9 | |||||||||||
Weighted average shares outstanding | 103.2 | 101.4 | 102.8 | 101.2 |
June 20, 2015 | June 14, 2014 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 220.7 | $ | 232.4 | |||
Accounts receivables, net | 355.3 | 434.3 | |||||
Inventories, net | 452.2 | 459.8 | |||||
Other current assets | 79.8 | 66.5 | |||||
Total current assets | 1,108.0 | 1,193.0 | |||||
Property, plant and equipment, net | 137.3 | 146.0 | |||||
Goodwill and other indefinite-lived intangibles | 1,124.4 | 1,135.3 | |||||
Other non-current assets | 184.9 | 206.9 | |||||
Total assets | $ | 2,554.6 | $ | 2,681.2 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable and other accrued liabilities | $ | 345.8 | $ | 286.7 | |||
Current maturities of long-term debt | 45.2 | 48.4 | |||||
Total current liabilities | 391.0 | 335.1 | |||||
Long-term debt | 787.9 | 1,082.9 | |||||
Other non-current liabilities | 376.9 | 355.3 | |||||
Stockholders' equity | 998.8 | 907.9 | |||||
Total liabilities and stockholders' equity | $ | 2,554.6 | $ | 2,681.2 |
24 Weeks Ended | |||||||
June 20, 2015 | June 14, 2014 | ||||||
OPERATING ACTIVITIES: | |||||||
Net earnings | $ | 65.3 | $ | 64.8 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 21.7 | 25.0 | |||||
Stock-based compensation expense | 14.1 | 11.2 | |||||
Excess tax benefits from stock-based compensation | (3.8 | ) | (3.7 | ) | |||
Pension expense | 12.9 | 5.9 | |||||
Restructuring and impairment costs | 2.7 | 3.9 | |||||
Other | (7.0 | ) | 1.1 | ||||
Changes in operating assets and liabilities | (11.0 | ) | (42.6 | ) | |||
Net cash provided by operating activities | 94.9 | 65.6 | |||||
INVESTING ACTIVITIES: | |||||||
Additions to property, plant and equipment | (15.8 | ) | (12.5 | ) | |||
Investment in joint venture | — | (0.7 | ) | ||||
Other | 3.2 | (1.6 | ) | ||||
Net cash used in investing activities | (12.6 | ) | (14.8 | ) | |||
FINANCING ACTIVITIES: | |||||||
Payments on long-term debt | (67.7 | ) | (19.4 | ) | |||
Cash dividends paid | (12.3 | ) | (12.0 | ) | |||
Purchase of common stock for treasury | (5.9 | ) | — | ||||
Purchases of shares under employee stock plans | (7.5 | ) | (9.4 | ) | |||
Proceeds from the exercise of stock options | 8.5 | 3.8 | |||||
Excess tax benefits from stock-based compensation | 3.8 | 3.7 | |||||
Net cash used in financing activities | (81.1 | ) | (33.3 | ) | |||
Effect of foreign exchange rate changes | (4.3 | ) | 0.7 | ||||
(Decrease) increase in cash and cash equivalents | (3.1 | ) | 18.2 | ||||
Cash and cash equivalents at beginning of the year | 223.8 | 214.2 | |||||
Cash and cash equivalents at end of the period | $ | 220.7 | $ | 232.4 |
GAAP Basis Fiscal 2015 Q2 | Foreign Exchange Impact | Fiscal 2015 Q2 Constant Currency Basis | GAAP Basis Fiscal 2014 Q2 | Constant Currency Growth | Reported Growth | ||||||||||||||||
Revenue | $ | 630.1 | $ | 13.5 | $ | 643.6 | $ | 613.5 | 4.9 | % | 2.7 | % |
GAAP Basis Revenue | Foreign Exchange Impact | Adjustments (1) | As Adjusted Revenue | ||||||||||||
Fiscal 2015 Q2 | $ | 630.1 | $ | 13.5 | $ | 643.6 | |||||||||
Fiscal 2014 Q2 | $ | 613.5 | $ | (11.6 | ) | $ | 601.9 | ||||||||
Revenue Growth | 2.7 | % | 6.9 | % |
(1) | Fiscal 2014 Q2 Adjustments include the impact from planned retail store closures associated with the Strategic Realignment Plan and the termination of the Patagonia license agreement. |
GAAP Basis Fiscal 2015 Q2 | Foreign Exchange Impact | Fiscal 2015 Q2 Constant Currency Basis | GAAP Basis Fiscal 2014 Q2 | Constant Currency Growth | Reported Growth | ||||||||||||||||
Revenue: | |||||||||||||||||||||
Lifestyle Group | $ | 253.4 | $ | 2.6 | $ | 256.0 | $ | 264.1 | (3.1 | )% | (4.1 | )% | |||||||||
Performance Group | 223.3 | 7.8 | 231.1 | 211.2 | 9.4 | 5.7 | |||||||||||||||
Heritage Group | 127.4 | 2.7 | 130.1 | 113.5 | 14.6 | 12.2 | |||||||||||||||
Other | 26.0 | 0.4 | 26.4 | 24.7 | 6.9 | 5.3 | |||||||||||||||
Total | $ | 630.1 | $ | 13.5 | $ | 643.6 | $ | 613.5 | 4.9 | % | 2.7 | % |
GAAP Basis Operating Profit | Adjustments (1) | As Adjusted Operating Profit | |||||||||
Fiscal 2015 Q2 | $ | 47.6 | $ | 3.7 | $ | 51.3 | |||||
Operating margin | 7.6 | % | 8.1 | % | |||||||
Fiscal 2014 Q2 | $ | 49.0 | $ | 6.0 | $ | 55.0 | |||||
Operating margin | 8.0 | % | 9.0 | % |
(1) | Fiscal 2015 Q2 Adjustments include Restructuring and Impairment Costs. Fiscal 2014 Q2 Adjustments include Acquisition-Related Integration and Restructuring Costs. |
GAAP Basis EPS | Adjustments (1) | As Adjusted EPS | |||||||||
Fiscal 2015 Q2 | $ | 0.24 | $ | 0.03 | $ | 0.27 | |||||
Fiscal 2014 Q2 | $ | 0.27 | $ | 0.04 | $ | 0.31 |
(1) | Fiscal 2015 Q2 Adjustments include Restructuring and Impairment Costs. Fiscal 2014 Q2 Adjustments include Acquisition-Related Integration and Restructuring Costs. |
Fiscal 2015 Q2 | Fiscal 2014 Q2 | ||||||
GAAP reported debt | $ | 833.1 | $ | 1,131.3 | |||
Cash and cash equivalents | (220.7 | ) | (232.4 | ) | |||
Net debt | $ | 612.4 | $ | 898.9 |
Constant Currency Growth | Foreign Exchange Impact | GAAP Basis Reported Growth | ||||||
Revenue growth: | ||||||||
North America | 1.3 | % | (0.7 | )% | 0.6 | % | ||
EMEA | 10.0 | (11.4 | ) | (1.4 | ) | |||
Asia Pacific | 56.9 | (1.6 | ) | 55.3 | ||||
Latin America | 5.1 | (6.5 | ) | (1.4 | ) |
GAAP Basis Full-Year 2015 Guidance | Foreign Exchange Impact | Full-Year 2015 Guidance Constant Currency Basis | |||||
Revenue | $ 2,820 - 2,850 | $ | 70.0 | $ 2,890 - 2,920 | |||
Percentage growth | 2.0 - 3.0% | 5.0 - 6.0% |
GAAP Basis Full-Year 2015 Guidance | Adjustments (1) | As Adjusted Full-Year 2015 Guidance | |||||
Diluted earnings per share | $ 1.39 - 1.46 | $ | 0.14 | $ 1.53 - 1.60 |
(1) | Fiscal 2015 Full-Year Guidance Adjustments include estimated Restructuring and Impairment Costs and estimated Debt Extinguishment Costs. |
As Adjusted Full-Year 2015 Guidance | Foreign Exchange Impact | As Adjusted Full-Year 2015 Guidance Constant Currency Basis | |||||
Diluted earnings per share | $ 1.53 - 1.60 | $ | 0.15 | $ 1.68 - 1.75 |
* | 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 acquisition-related integration costs, restructuring and impairment costs and debt extinguishment costs were excluded. The Company also describes the revenue impact from planned retail store closures associated with the Strategic Realignment Plan and the termination of the Patagonia license agreement. 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 has defined net debt as debt less cash and cash equivalents. The Company believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash to repay debt. 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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