ROCKFORD, Mich., Feb. 25, 2020 (GLOBE NEWSWIRE) — Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the fourth quarter and full-year ended December 28, 2019. The Company also provided its initial fiscal 2020 outlook.“We delivered a strong finish to the fiscal year reflecting progress on our Global Growth Agenda, which drove over 5% constant currency revenue growth and record fourth quarter adjusted earnings per share of $0.59. Our fourth quarter revenues were highlighted by mid-teens growth from our largest brands – Merrell and Sperry, acceleration in our digital-direct DTC offense and improved international expansion,” said Blake Krueger, Wolverine World Wide’s Chairman, Chief Executive Officer and President. “I am pleased with our performance in fiscal 2019 and proud of our team’s efforts that contributed to another record year.”FOURTH QUARTER 2019 REVIEWReported revenue of $607.4 million increased 4.8% compared to the prior year and adjusting for currency, increased 5.1%.Reported gross margin of 37.8%, decreased 140 basis points versus the prior year. Reported operating margin was -0.8%, and adjusted operating margin was 10.1%.Reported diluted loss per share was $0.01, compared to earnings per share of $0.39 in the prior year. Reported results include the impact of the previously disclosed litigation settlements related to legacy environmental matters.Adjusted diluted earnings per share increased 13.5% to $0.59, compared to $0.52 in the prior year.The reported tax rate increased to 95.3%, compared to 4.0% in the prior year. The effective tax rates in both periods benefited from a change in mix of taxable income within jurisdictions with varying tax rates and certain discrete items. The adjusted tax rate was 8.7%, compared to 11.8% in the prior year.Inventories increased 9.6% compared to the prior year, in line with expectations, and included $14.9 million related to new stores, the Saucony Italy acquisition and incremental tariff costs. Inventories would have increased 4.9% without these items.The Company generated $206.5 million in cash from operations during the fourth quarter.The Company repurchased $4.9 million of shares in the quarter at an average price of $26.90 per share.FULL-YEAR 2019 REVIEW
Reported revenue of $2,273.7 million increased 1.5% compared to the prior year and adjusting for currency, increased 2.3%.Reported gross margin of 40.6%, decreased 50 basis points versus the prior year. Reported operating margin was 7.5%, and adjusted operating margin was 11.5%. Reported diluted earnings per share were $1.44, compared to $2.05 in the prior year. Reported results include the impact of the previously disclosed litigation settlements related to legacy environmental matters. Adjusted diluted earnings per share increased 3.7% to $2.25, compared to $2.17 in the prior year. The reported tax rate was 11.7%, compared to 11.9% in the prior year. The adjusted tax rate was 15.7%, compared to 13.3% in the prior year. Full-year cash from operations of $222.6 million exceeded expectations.The Company repurchased $319.2 million of shares during the year at an average price of $29.24 per share, and has approximately $508 million available under its authorized share repurchase programs.“We had a very solid finish to the year, with Merrell, Sperry and Saucony – our top three brands – combining to deliver nearly 10% constant currency growth in the second half,” stated Mike Stornant, Senior Vice President and Chief Financial Officer. “In the fourth quarter, our eCommerce and International channels exceeded expectations and were major contributors to our overall performance. Our efficient business model and strong deployment of capital throughout 2019 allowed us to deliver excellent earnings leverage, resulting in record adjusted earnings per share for both the fourth quarter and full-year. We are also pleased with our strong cash generation for the quarter and full-year, partially aided by excellent inventory management in the fourth quarter.”FULL-YEAR 2020 OUTLOOK
The Company is providing its initial revenue and earnings outlook for the full-year, which is summarized below. The Company’s guidance includes the current estimated impact related to the coronavirus for the first half of 2020. In recent years, the Company has diversified its supply chain away from China and in 2020, China is expected to represent less than 20% of its global production, down from approximately 40% in fiscal 2019. The Company is continuing to monitor and adjust to the fluid coronavirus situation, and recognizes that there could be additional future impact to the global supply chain or customer demand.
Revenue is expected to be approximately $2.29 billion to $2.34 billion, representing growth of approximately 3.0% at the high-end of the range. Constant currency revenue growth is expected to be approximately 3.5% at the high-end of the range. This outlook includes an estimated revenue impact from the coronavirus of approximately $30 million in the first half of 2020. Excluding the estimated coronavirus impact, constant currency growth in 2020 is expected to be 4.5% at the high-end of the range. Gross margin is expected to be approximately 41.0%.Reported operating margin is expected to be approximately 11.0% and adjusted operating margin is expected to be approximately 12.0%.The effective tax rate is expected to be approximately 19.0%. Diluted weighted average shares are expected to be approximately 82.5 million. Reported diluted earnings per share are expected to be approximately $2.05 to $2.20. Adjusted diluted earnings per share are expected to be approximately $2.25 to $2.40. Both reported and adjusted EPS include the negative estimated impact of $0.10 related to foreign currency and $0.10 related to the coronavirus. Excluding the estimated coronavirus impact and the impact of foreign currency, adjusted EPS on a constant currency basis is expected to be $2.60 at the high-end of the range. Cash flow from operations is expected to be approximately $240 million.NON-GAAP FINANCIAL MEASURES
Measures referred to as “adjusted” financial results exclude environmental and other related costs and environmental cost recoveries, business development related costs, reorganization costs, the impact of tax reform updates and a foreign currency remeasurement gain that is not expected to reoccur. The Company also presents constant currency information, which is a non-GAAP measure that 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 basis 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 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 of current period results to the prior period by adjusting for certain items that may not be indicative of core operating results 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. 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.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® and HYTEST®. 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 170 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 global growth and the Company’s fiscal 2020 outlook and guidance. In addition, words such as “guidance,” “estimates,” “anticipates,” “believes,” “forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,” “outlook,” “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, including as a result of the developing situation regarding the coronavirus outbreak that began in Wuhan, China; the cost and availability of raw materials, inventories, services and labor for 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; 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 retailers; increases 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 other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar event; 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 intangibles; 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 or other 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 earnings per share)
WOLVERINE WORLD WIDE, INC.CONSOLIDATED CONDENSED BALANCE SHEETS
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WOLVERINE WORLD WIDE, INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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The following tables contain information regarding the non-GAAP financial measures used by the Company in the presentation of its financial results:
WOLVERINE WORLD WIDE, INC.Q4 2019 RECONCILIATION TABLESRECONCILIATION OF REPORTED REVENUE
TO ADJUSTED REVENUE ON A CONSTANT CURRENCY BASIS*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED OPERATING MARGIN
TO ADJUSTED OPERATING MARGIN*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED DILUTED EPS
TO ADJUSTED DILUTED EPS*
(Unaudited)
RECONCILIATION OF THE REPORTED EFFECTIVE TAX RATE
TO THE ADJUSTED EFFECTIVE TAX RATE*
(Unaudited)
2019 FULL-YEAR RECONCILIATION TABLESRECONCILIATION OF REPORTED REVENUE
TO ADJUSTED REVENUE ON A CONSTANT CURRENCY BASIS*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED OPERATING MARGIN
TO ADJUSTED OPERATING MARGIN*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED DILUTED EPS
TO ADJUSTED DILUTED EPS*
(Unaudited)
RECONCILIATION OF THE REPORTED EFFECTIVE TAX RATE
TO THE ADJUSTED EFFECTIVE TAX RATE*
(Unaudited)
2020 GUIDANCE RECONCILIATION TABLESRECONCILIATION OF FISCAL 2020 FULL-YEAR REPORTED REVENUE GUIDANCE TO
ADJUSTED REVENUE GUIDANCE ON A CONSTANT CURRENCY BASIS*
(Unaudited)
(In millions)
RECONCILIATION OF FISCAL 2020 FULL-YEAR REPORTED OPERATING
MARGIN GUIDANCE TO ADJUSTED OPERATING MARGIN GUIDANCE*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED DILUTED EPS
TO ADJUSTED DILUTED EPS AND SUPPLEMENTAL INFORMATION*
(Unaudited)
(In millions)
RECONCILIATION OF REPORTED DILUTED EPS TO ADJUSTED DILUTED EPS EXCLUDING THE ESTIMATED IMPACT OF THE CORONAVIRUS AND FOREIGN CURRENCY*
(Unaudited)
(In millions)
CONTACT:
Michael D. Stornant
(616) 866-5728
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