In line revenue growth and record gross margin lead to 10% adjusted EPS growth, ahead of expectations for Q3
ROCKFORD, Mich., Nov. 07, 2019 (GLOBE NEWSWIRE) — Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the third quarter ended September 28, 2019. The Company also provided an update on its full-year 2019 outlook.“We delivered our highest quarterly revenue increase of the year driven by constant currency growth of over 11% from Merrell, Sperry and Saucony. Our adjusted earnings per share of $0.68 was a record performance for the Company and meaningfully better than our expectations heading into the quarter,” said Blake Krueger, Wolverine World Wide’s Chairman, Chief Executive Officer and President. “The double-digit growth from our biggest brands is a direct result of our continued focus on building trend-right product that resonates with consumers and ongoing execution of our digital-direct offense.”THIRD QUARTER 2019 REVIEW
Reported revenue of $574.3 million increased 2.8% as compared to the prior year and adjusting for currency, increased 3.6%.Reported gross margin of 42.4%, was in line with expectations, and increased 80 basis points compared to 41.6% in the prior year.Reported operating margin was 11.9%. Adjusted operating margin of 14.1% exceeded expectations expanding 150 basis points compared to the prior year.Reported diluted earnings per share were $0.57, compared to $0.60 in the prior year. Adjusted diluted earnings per share increased 9.7% to $0.68 compared to $0.62 in the prior year.The reported tax rate was 20.3%, as compared to 7.8% in the prior year. The prior year effective rate was favorably impacted by a $40 million voluntary pension contribution, resulting in a $0.06 benefit in the prior year.Inventories increased 28.8% compared to the prior year, slightly better than expectations, and include $8.4 million related to new stores and the Saucony Europe acquisition.The Company repurchased $107 million of shares in the quarter at an average price of $25.13, and has approximately $513 million available under its authorized share repurchase programs.“The strong results from Merrell, Sperry and Saucony demonstrate the benefits of our demand creation investments and steady execution against our global growth model. This revenue performance combined with continued operational discipline led to excellent earnings leverage in the quarter, with adjusted earnings per share growth of nearly 10% and gross margin of 42.4%, the highest of any third quarter for the Company,” stated Mike Stornant, Senior Vice President and Chief Financial Officer. “Our well-positioned capital structure allowed us to continue to opportunistically repurchase stock. Our strong liquidity position provides considerable flexibility to drive future long-term shareholder return.”FULL-YEAR 2019 OUTLOOK
The Company is maintaining its full-year revenue guidance and updating its full-year earnings outlook to reflect estimated new tariff costs in the fourth quarter.Revenue is expected to be approximately $2.28 billion including approximately 7.0% constant currency growth in the fourth quarter.Gross margin is still expected to be approximately 41.0% matching the prior year’s record level.Reported operating margin is now expected to be approximately 10.5% 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 now expected to be approximately 86.4 million.Reported diluted earnings per share are now expected to be approximately $1.96 and adjusted diluted earnings per share are now expected to be approximately $2.25 including $0.03 related to new tariffs on products expected to be sold in the fourth quarter.Cash flow from operations is expected to be approximately $190 million.NON-GAAP FINANCIAL MEASURES
Measures referred to as “adjusted” financial results exclude environmental and other related costs, business development related costs, reorganization costs, other 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 revenue growth during the rest of fiscal 2019 and focus on leveraging its strong liquidity and financial position to drive shareholder returns; and the Company’s fiscal 2019 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; 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; the success of the Company’s restructuring and 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 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
(Unaudited)
(In millions)
WOLVERINE WORLD WIDE, INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
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.Q3 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)
2019 GUIDANCE RECONCILIATION TABLESRECONCILIATION OF FISCAL 2019 Q4 REPORTED REVENUE GUIDANCE
TO ADJUSTED REVENUE GUIDANCE ON A CONSTANT CURRENCY BASIS*
(Unaudited)
(In millions)
RECONCILIATION OF FISCAL 2019 FULL-YEAR REPORTED OPERATING MARGIN
GUIDANCE TO ADJUSTED OPERATING MARGIN GUIDANCE*
(Unaudited)
RECONCILIATION OF FISCAL 2019 FULL-YEAR DILUTED EPS
GUIDANCE TO ADJUSTED DILUTED EPS GUIDANCE*
(Unaudited)
CONTACT: Michael D. Stornant
(616) 866-5728
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