Movado Group, Inc. Announces First Quarter Fiscal 2022 Results
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~ Delivers Record 1st Quarter Operating Income ~
~ Company Provides Fiscal Year Outlook ~
~ Board Declares Quarterly Dividend ~
Fiscal 2022 First Quarter Highlights (see table below for GAAP and Non-GAAP measures)
-
Delivered topline growth with an increase of 93.5% over first quarter fiscal 2021. Total net sales decreased 8.0% as compared to pre-pandemic first quarter fiscal 2020 with a 10.8% increase in
U.S. net sales offset by a 20.8% decrease in International net sales reflecting the continued closure of retail stores inEurope andLatin America - Drove adjusted gross margin expansion of 420 bps from prior year period to 55.0% and rose 110 bps from first quarter fiscal 2020
-
Generated first quarter adjusted operating income of
$14.1 million as compared to an adjusted operating loss of$17.6 million last year and adjusted operating income of$7.2 million in the first quarter of fiscal 2020 -
Delivered adjusted diluted earnings per share of
$0.43 as compared to ($0.56 ) in the prior year period and$0.24 in the pre-pandemic first quarter of fiscal 2020 -
Maintained strong balance sheet at quarter end, including cash of
$187.0 million , a 4.4% decline in inventory and a$72.5 million reduction in debt from prior year quarter end
Non-GAAP Items (see attached table for GAAP and Non-GAAP measures)
First quarter fiscal 2022 results of operations included the following charges:
-
a
$0.7 million pre-tax charge, or$0.6 million after tax, representing$0.03 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition ofOlivia Burton ; and -
a
$0.1 million pre-tax charge, or$0.1 million after tax, representing$0.00 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT.
First quarter fiscal 2021 results of operations included the following charges:
-
a
$155.9 million adjustment, or$131.1 million after tax, representing$5.66 per diluted share, related to the impairment of goodwill and certain intangible assets; -
a
$0.7 million pre-tax charge, or$0.6 million after tax, representing$0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition ofOlivia Burton ; -
a
$0.7 million pre-tax charge, or$0.4 million after tax, representing$0.02 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT; and -
a
$7.2 million pre-tax adjustment, or$5.0 million after tax, or$0.22 per diluted share, related to costs due to corporate initiatives taken in response to the COVID-19 pandemic.
First Quarter Fiscal 2022 Results (see attached table for GAAP and non-GAAP measures)
-
Net sales increased 93.5% to
$134.8 million compared to$69.7 million in the first quarter of fiscal 2021. Net sales on a constant dollar basis increased 87.2% compared to the first quarter of fiscal 2021.U.S. net sales increased 130.9% as compared to the first quarter of last year and increased 10.8% as compared to pre-pandemic first quarter fiscal 2020. International net sales increased 67.5% as compared to the first quarter of last year and decreased 20.8% as compared to pre-pandemic first quarter of fiscal 2020. -
Gross profit was
$74.2 million , or 55.0% of net sales, compared to$31.9 million , or 45.8% of net sales, in the first quarter of fiscal 2021. Adjusted gross profit for the first quarter of fiscal 2021 was$35.4 million or 50.8%, which excludes$3.5 million related to the inventory reserves recorded as a result of the COVID-19 pandemic. The increase in adjusted gross margin percentage was primarily the result of leveraging certain fixed costs as a result of higher sales, favorable changes in channel and product mix and favorable foreign currency exchange rates. -
Operating expenses were
$60.9 million , compared to$214.1 million in the first quarter of fiscal 2021. Adjusted operating expenses for the first quarter of fiscal 2022 were$60.1 million , which excludes the operating expense charges mentioned above in the Non-GAAP Items section. For the first quarter of fiscal 2021, adjusted operating expenses were$53.0 million , which excludes the operating expense charges mentioned above in the Non-GAAP Items section. The increase in adjusted operating expenses was primarily due to higher marketing expenses and performance-based compensation, partially offset by the Company’s initiative to minimize all operating expenses, including non-essential operating expenses, and certain selling and payroll related expenses. As a percent of sales, adjusted operating expenses decreased to 44.6% of sales from 76.1% in the prior year period primarily due to sales leverage. -
Operating income was
$13.3 million compared to operating loss of$182.2 million in the same period last year. Adjusted operating income for the first quarter of fiscal 2022 was$14.1 million , which excludes the fiscal 2022 charges listed above in the Non-GAAP Items section and compares to adjusted operating loss for the first quarter of fiscal 2021 of$17.6 million , which excludes the fiscal 2021 charges listed above in the Non-GAAP Items section. -
The Company recorded a tax provision of
$3.3 million , compared to a tax benefit of$32.3 million in the first quarter of last year. The first quarter of fiscal 2022 included a benefit of$0.2 million primarily associated with the amortization of acquired intangible assets related toOlivia Burton and MVMT. The first quarter of fiscal 2021 included a benefit of$0.1 million associated with the amortization of acquired intangible assets related toOlivia Burton , a$0.3 million benefit related to the amortization of acquired intangible assets and deferred compensation related to MVMT, a$24.9 million benefit related to the tax deductible portion of the impairment of goodwill and certain intangible assets, and a$2.2 million benefit related to corporate initiatives taken in response to the COVID-19 pandemic. -
Net income was
$9.4 million , or$0.40 per diluted share, compared to net loss of$150.0 million , or ($6.48 ) per diluted share, in the same quarter last year. In the first quarter of fiscal 2022, adjusted net income was$10.1 million , or$0.43 per diluted share, which excludes the fiscal 2022 charges listed above in the Non-GAAP Items section after the associated tax effects described in the immediately preceding bullet. For the first quarter of fiscal 2021, adjusted net loss was$12.9 million , or ($0.56 ) per diluted share, which excludes the fiscal 2021 charges listed above in the Non-GAAP Items section after the associated tax effects described in the immediately preceding bullet.
Fiscal 2022 Outlook
While the Company continues to see the negative impact of COVID-19 related store closures and restrictions on consumer mobility across several regions including
Quarterly Dividend and Share Repurchase Program
The Company also announced that on
During the first quarter of fiscal 2022, the Company repurchased approximately 11,200 shares under its share repurchase program. As of
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today,
In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as “expects,” “anticipates,” “believes,” “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “should” and variations of such words and similar expressions. Similarly, statements in this press release that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements and levels of future dividends to differ materially from those expressed in, or implied by, these statements. These risks and uncertainties may include, but are not limited to general economic and business conditions which may impact disposable income of consumers in
(Tables to follow)
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(In thousands, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
2021 |
2020 |
||||||
Net sales |
$ 134,798 |
$ 69,666 |
|||||
Cost of sales |
60,596 |
37,773 |
|||||
Gross profit |
74,202 |
31,893 |
|||||
Operating expenses |
60,946 |
58,137 |
|||||
Impairment of goodwill and intangible assets |
- |
155,919 |
|||||
Total operating expenses |
60,946 |
214,056 |
|||||
Operating income/(loss) |
13,256 |
(182,163) |
|||||
Other income |
100 |
15 |
|||||
Interest expense |
(275) |
(271) |
|||||
Income/(loss) before income taxes |
13,081 |
(182,419) |
|||||
Provision/(benefit) for income taxes |
3,330 |
(32,330) |
|||||
Net income/(loss) |
9,751 |
(150,089) |
|||||
Less: Net income/(loss) attributable to noncontrolling interests |
342 |
(96) |
|||||
Net income/(loss) attributable to |
$ 9,409 |
$ (149,993) |
|||||
Diluted Income Per Share Information | |||||||
Net income/(loss) attributable to |
$ 0.40 |
$ (6.48) |
|||||
Weighted diluted average shares outstanding |
23,741 |
23,141 |
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
As Reported | |||||||||
Three Months Ended | |||||||||
% Change | |||||||||
2021 |
2020 |
||||||||
Total net sales, as reported |
$ 134,798 |
$ 69,666 |
93.5% |
||||||
Total net sales, constant dollar basis |
$ 130,440 |
$ 69,666 |
87.2% |
GAAP AND NON-GAAP MEASURES | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Gross Profit | Operating Income/(Loss) |
Pre-tax Income/(Loss) |
Provision/(Benefit) for Income Taxes |
Net Income/(Loss) Attributable to |
Diluted EPS | ||||||||||
Three Months Ended |
|||||||||||||||
As Reported (GAAP) |
$ 134,798 |
$ 74,202 |
$ 13,256 |
$ 13,081 |
$ 3,330 |
$ 9,409 |
$ 0.40 |
||||||||
Olivia Burton Costs (1) |
- |
- |
721 |
721 |
137 |
584 |
0.03 |
||||||||
MVMT Costs (2) |
- |
- |
131 |
131 |
33 |
98 |
0.00 |
||||||||
Adjusted Results (Non-GAAP) |
$ 134,798 |
$ 74,202 |
$ 14,108 |
$ 13,933 |
$ 3,500 |
$ 10,091 |
$ 0.43 |
||||||||
Three Months Ended |
|||||||||||||||
As Reported (GAAP) |
$ 69,666 |
$ 31,893 |
$ (182,163) |
$ (182,419) |
$ (32,330) |
$ (149,993) |
$ (6.48) |
||||||||
Olivia Burton Costs (1) |
- |
- |
685 |
685 |
119 |
566 |
0.02 |
||||||||
MVMT Costs (2) |
- |
- |
697 |
697 |
265 |
432 |
0.02 |
||||||||
- |
- |
155,919 |
155,919 |
24,867 |
131,052 |
5.66 |
|||||||||
Corporate Initiatives (4) |
3,508 |
7,240 |
7,240 |
2,239 |
5,001 |
0.22 |
|||||||||
Adjusted Results (Non-GAAP) |
$ 69,666 |
$ 35,401 |
$ (17,622) |
$ (17,878) |
$ (4,840) |
$ (12,942) |
$ (0.56) |
||||||||
(1) Related to the amortization of acquired intangible assets for |
|||||||||||||||
(2) Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT, where applicable. |
|||||||||||||||
(3) Related to the impairment of goodwill and impairment of certain of MVMT's intangible assets. |
|||||||||||||||
(4) Related to provision due to the impact to the business of the COVID-19 pandemic. |
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
2021 |
|
2021 |
|
2020 |
|||||
ASSETS | |||||||||
Cash and cash equivalents |
$ 186,950 |
$ 223,811 |
$ 187,830 |
||||||
Trade receivables, net |
78,584 |
76,931 |
49,765 |
||||||
Inventories |
169,966 |
152,580 |
177,832 |
||||||
Other current assets |
23,649 |
23,479 |
26,529 |
||||||
Income taxes receivable |
24,305 |
24,850 |
520 |
||||||
Total current assets |
483,454 |
501,651 |
442,476 |
||||||
Property, plant and equipment, net |
20,599 |
22,349 |
26,934 |
||||||
Operating lease right-of-use assets |
72,836 |
76,070 |
86,444 |
||||||
Deferred and non-current income taxes |
41,528 |
42,507 |
67,281 |
||||||
Other intangibles, net |
16,300 |
17,081 |
18,272 |
||||||
Other non-current assets |
59,989 |
59,599 |
56,506 |
||||||
Total assets |
$ 694,706 |
$ 719,257 |
$ 697,913 |
||||||
LIABILITIES AND EQUITY | |||||||||
Accounts payable |
$ 34,595 |
$ 28,187 |
$ 19,241 |
||||||
Accrued liabilities |
45,687 |
51,124 |
39,489 |
||||||
Accrued payroll and benefits |
9,727 |
18,047 |
6,768 |
||||||
Current operating lease liabilities |
15,413 |
15,861 |
15,053 |
||||||
Income taxes payable |
9,128 |
14,452 |
13,064 |
||||||
Total current liabilities |
114,550 |
127,671 |
93,615 |
||||||
Loans payable to bank, non current |
10,000 |
21,230 |
82,510 |
||||||
Deferred and non-current income taxes payable |
21,280 |
21,895 |
25,085 |
||||||
Non-current operating lease liabilities |
65,568 |
68,412 |
78,471 |
||||||
Other non-current liabilities |
51,528 |
50,115 |
44,721 |
||||||
Redeemable noncontrolling interest |
2,560 |
2,600 |
2,966 |
||||||
Shareholders' equity |
426,777 |
425,264 |
369,799 |
||||||
Noncontrolling interest |
2,443 |
2,070 |
746 |
||||||
Total equity |
429,220 |
427,334 |
370,545 |
||||||
Total liabilities, redeemable noncontrolling interest and equity |
$ 694,706 |
$ 719,257 |
$ 697,913 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended |
|||||||
April 30, |
|||||||
2021 |
2020 |
||||||
Cash flows from operating activities: | |||||||
Net income/(loss) |
$ 9,409 |
$ (149,993) |
|||||
Impairment of goodwill and intangible assets |
- |
155,919 |
|||||
Non-cash corporate initiatives |
- |
7,240 |
|||||
Depreciation and amortization |
3,173 |
3,885 |
|||||
Other non-cash adjustments |
2,288 |
(39,572) |
|||||
Changes in working capital |
(31,262) |
(2,677) |
|||||
Changes in non-current assets and liabilities |
1,019 |
(383) |
|||||
Net cash used in operating activities |
(15,373) |
(25,581) |
|||||
Cash flows from investing activities: | |||||||
Capital expenditures |
(407) |
(926) |
|||||
Tradenames and other intangibles |
(44) |
(41) |
|||||
Net cash used in investing activities |
(451) |
(967) |
|||||
Cash flows from financing activities: | |||||||
Repayment of bank borrowings |
(11,140) |
- |
|||||
Proceeds from bank borrowings |
- |
30,879 |
|||||
Dividends paid |
(6,962) |
- |
|||||
Stock awards and options exercised and other changes |
(1,385) |
(367) |
|||||
Stock repurchase |
(316) |
- |
|||||
Net cash (used in)/provided by financing activities |
(19,803) |
30,512 |
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(1,249) |
(2,007) |
|||||
Net change in cash, cash equivalents, and restricted cash |
(36,876) |
1,957 |
|||||
Cash, cash equivalents, and restricted cash at beginning of period |
224,423 |
186,438 |
|||||
Cash, cash equivalents, and restricted cash at end of period |
$ 187,547 |
$ 188,395 |
|||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents |
$ 186,950 |
$ 187,830 |
|||||
Restricted cash included in other non-current assets |
597 |
565 |
|||||
Cash, cash equivalents, and restricted cash |
$ 187,547 |
$ 188,395 |
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