Movado Group, Inc. Announces First Quarter Fiscal 2023 Results
~ Net Sales Increase 21.2% to
~ Gross Margin Expansion of 420 bps vs. Prior Year Period ~
~ EPS of
~ Board Approves Quarterly Dividend of
Fiscal 2023 First Quarter Highlights (See attached table for GAAP and Non-GAAP measures)
- Delivered topline growth of 21.2% or 24.3% on a constant dollar basis year over year;
- Expanded gross margin by 420 bps from prior year period to 59.2%;
- Decreased operating expenses as a percent of sales to 43.7% from 45.2% in the prior year period;
- Decreased adjusted operating expenses as a percent of sales to 43.2% from 44.6% in the prior year period;
-
Generated operating income of
$25.3 million as compared to$13.3 million in the prior year period; -
Generated adjusted operating income of
$26.1 million as compared to$14.1 million ; -
Achieved diluted earnings per share of
$0.79 as compared to$0.40 in the prior year period; -
Achieved adjusted diluted earnings per share of
$0.82 as compared to$0.43 ; and -
Ended the quarter with cash of
$225.3 million , a$38.3 million increase from$187.0 million at the end of the first quarter of fiscal 2022.
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
First quarter fiscal 2023 results of operations included the following charges:
-
$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 -
$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 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.
In this press release, reference to “adjusted” results exclude the impact of the above charges from the first quarter of fiscal years 2023 and 2022. Please refer to the attached GAAP and Non-GAAP measures table for a detailed reconciliation of the Company’s reported results to its adjusted, non-GAAP results.
First Quarter Fiscal 2023 Results
-
Net sales increased 21.2% (24.3% on a constant dollar basis) to
$163.4 million compared to$134.8 million in the first quarter of fiscal 2022. The increase in net sales reflected growth in wholesale customers’ brick and mortar stores and in Movado Company Stores.U.S. net sales increased 6.6% as compared to the first quarter of last year. International net sales increased 35.3% as compared to the first quarter of last year. -
Gross profit was
$96.7 million , or 59.2% of net sales, compared to$74.2 million , or 55.0% of net sales in the first quarter of fiscal 2022. The increase in gross margin percentage was primarily the result of favorable changes in channel and product mix partially offset by increased shipping costs. -
Operating expenses increased to
$71.4 million in the first quarter of fiscal 2023 from$60.9 million in the first quarter of fiscal 2022. Adjusted operating expenses were$70.6 million compared to$60.1 million in the prior year period. This increase was primarily due to higher marketing expenses, payroll and related costs and an increase in certain other operating expenses to support the increase in net sales. As a percent of sales, adjusted operating expenses decreased to 43.2% of sales from 44.6% in the prior year period primarily due to improved sales leverage. -
Operating income was
$25.3 million compared to operating income of$13.3 million in the first quarter of fiscal 2022. Adjusted operating income was$26.1 million for the first quarter of fiscal 2023 and$14.1 million for the prior year period. -
The Company recorded a tax provision of
$6.0 million , as compared to a tax provision of$3.3 million in the first quarter of fiscal 2022. Based upon adjusted pre-tax income, the adjusted tax provision was$6.2 million , or an adjusted tax rate of 23.7%, as compared to an adjusted tax provision of$3.5 million , or an adjusted tax rate of 25.1%, in the first quarter of fiscal 2022. -
Net income for the first quarter of fiscal 2023 was
$18.5 million , or$0.79 per diluted share, compared to net income of$9.4 million , or$0.40 per diluted share, for the same period in the prior year. Adjusted net income for the fiscal 2023 period was$19.1 million , or$0.82 per diluted share, compared to adjusted net income of$10.1 million , or$0.43 per diluted share, for the first quarter of fiscal 2022.
Fiscal 2023 Outlook
The Company expects fiscal 2023 net sales to be in a range of approximately
Quarterly Dividend and Share Repurchase Program
The Company also announced that on
During the first quarter of fiscal 2023, the Company repurchased approximately 378,400 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 | |||||||||
|
2022 |
|
|
2021 |
|
||||
Net sales |
$ |
163,424 |
|
$ |
134,798 |
|
|||
Cost of sales |
|
66,739 |
|
|
60,596 |
|
|||
Gross profit |
|
96,685 |
|
|
74,202 |
|
|||
Total operating expenses |
|
71,391 |
|
|
60,946 |
|
|||
Operating income |
|
25,294 |
|
|
13,256 |
|
|||
Non-operating income/(expense): | |||||||||
Other income |
|
83 |
|
|
100 |
|
|||
Interest expense |
|
(112 |
) |
|
(275 |
) |
|||
Income before income taxes |
|
25,265 |
|
|
13,081 |
|
|||
Provision for income taxes |
|
6,011 |
|
|
3,330 |
|
|||
Net income |
|
19,254 |
|
|
9,751 |
|
|||
Less: Net income attributable to noncontrolling interests |
|
741 |
|
|
342 |
|
|||
Net income attributable to |
$ |
18,513 |
|
$ |
9,409 |
|
|||
Diluted Income Per Share Information | |||||||||
Net income attributable to |
$ |
0.79 |
|
$ |
0.40 |
|
|||
Weighted diluted average shares outstanding |
|
23,397 |
|
|
23,741 |
|
GAAP AND NON-GAAP MEASURES | ||||||||
(In thousands, except for percentage data) | ||||||||
(Unaudited) | ||||||||
As Reported | ||||||||
Three Months Ended | ||||||||
% Change | ||||||||
|
2022 |
|
2021 |
|||||
Total net sales, as reported |
$ |
163,424 |
$ |
134,798 |
21.2% |
|||
Total net sales, constant dollar basis |
$ |
167,581 |
$ |
134,798 |
24.3% |
GAAP AND NON-GAAP MEASURES | |||||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Gross Profit | Total Operating Expenses |
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) |
$ |
163,424 |
$ |
96,685 |
$ |
71,391 |
|
$ |
25,294 |
$ |
25,265 |
$ |
6,011 |
$ |
18,513 |
$ |
0.79 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(687 |
) |
|
687 |
|
687 |
|
131 |
|
556 |
|
0.03 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(82 |
) |
|
82 |
|
82 |
|
20 |
|
62 |
|
0.00 |
||||||||
Adjusted Results (Non-GAAP) |
$ |
163,424 |
$ |
96,685 |
$ |
70,622 |
|
$ |
26,063 |
$ |
26,034 |
$ |
6,162 |
$ |
19,131 |
$ |
0.82 |
||||||||
Three Months Ended |
|||||||||||||||||||||||||
As Reported (GAAP) |
$ |
134,798 |
$ |
74,202 |
$ |
60,946 |
|
$ |
13,256 |
$ |
13,081 |
$ |
3,330 |
$ |
9,409 |
$ |
0.40 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(721 |
) |
|
721 |
|
721 |
|
137 |
|
584 |
|
0.03 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(131 |
) |
|
131 |
|
131 |
|
33 |
|
98 |
|
0.00 |
||||||||
Adjusted Results (Non-GAAP) |
$ |
134,798 |
$ |
74,202 |
$ |
60,094 |
|
$ |
14,108 |
$ |
13,933 |
$ |
3,500 |
$ |
10,091 |
$ |
0.43 |
(1) |
Related to the amortization of acquired intangible assets for |
||||
(2) |
Related to the amortization of acquired intangible assets and the MVMT brand's deferred compensation, where applicable. |
CONSOLIDATED BALANCE SHEETS | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
|
2022 |
|
2022 |
|
2021 |
||||||
ASSETS | |||||||||||
Cash and cash equivalents |
$ |
225,256 |
$ |
277,128 |
$ |
186,950 |
|||||
Trade receivables, net |
|
92,744 |
|
91,558 |
|
78,584 |
|||||
Inventories |
|
180,003 |
|
160,283 |
|
169,966 |
|||||
Other current assets |
|
23,558 |
|
16,974 |
|
23,649 |
|||||
Income taxes receivable |
|
3,421 |
|
7,941 |
|
24,305 |
|||||
Total current assets |
|
524,982 |
|
553,884 |
|
483,454 |
|||||
Property, plant and equipment, net |
|
18,434 |
|
19,470 |
|
20,599 |
|||||
Operating lease right-of-use assets |
|
79,717 |
|
68,599 |
|
72,836 |
|||||
Deferred and non-current income taxes |
|
42,854 |
|
42,596 |
|
41,528 |
|||||
Other intangibles, net |
|
11,990 |
|
13,507 |
|
16,300 |
|||||
Other non-current assets |
|
62,007 |
|
63,104 |
|
59,989 |
|||||
Total assets |
$ |
739,984 |
$ |
761,160 |
$ |
694,706 |
|||||
LIABILITIES AND EQUITY | |||||||||||
Accounts payable |
$ |
44,140 |
$ |
46,011 |
$ |
34,595 |
|||||
Accrued liabilities |
|
54,698 |
|
48,522 |
|
45,687 |
|||||
Accrued payroll and benefits |
|
7,822 |
|
25,117 |
|
9,727 |
|||||
Current operating lease liabilities |
|
16,588 |
|
13,693 |
|
15,413 |
|||||
Income taxes payable |
|
15,141 |
|
18,123 |
|
9,128 |
|||||
Total current liabilities |
|
138,389 |
|
151,466 |
|
114,550 |
|||||
Loans payable to bank, non current |
|
- |
|
- |
|
10,000 |
|||||
Deferred and non-current income taxes payable |
|
19,385 |
|
19,614 |
|
21,280 |
|||||
Non-current operating lease liabilities |
|
70,440 |
|
62,730 |
|
65,568 |
|||||
Other non-current liabilities |
|
47,301 |
|
50,264 |
|
51,528 |
|||||
Redeemable noncontrolling interest |
|
2,251 |
|
2,311 |
|
2,560 |
|||||
Shareholders' equity |
|
459,650 |
|
472,808 |
|
426,777 |
|||||
Noncontrolling interest |
|
2,568 |
|
1,967 |
|
2,443 |
|||||
Total equity |
|
462,218 |
|
474,775 |
|
429,220 |
|||||
Total liabilities, redeemable noncontrolling interest and equity |
$ |
739,984 |
$ |
761,160 |
$ |
694,706 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended |
||||||||||
|
||||||||||
|
|
|
||||||||
|
2022 |
|
|
|
2021 |
|
||||
Cash flows from operating activities: | ||||||||||
Net income |
$ |
19,254 |
|
$ |
9,751 |
|
||||
Depreciation and amortization |
|
2,932 |
|
|
3,173 |
|
||||
Other non-cash adjustments |
|
1,239 |
|
|
1,946 |
|
||||
Changes in working capital |
|
(43,676 |
) |
|
(31,262 |
) |
||||
Changes in non-current assets and liabilities |
|
(501 |
) |
|
1,019 |
|
||||
Net cash used in operating activities |
|
(20,752 |
) |
|
(15,373 |
) |
||||
Cash flows from investing activities: | ||||||||||
Capital expenditures |
|
(1,381 |
) |
|
(407 |
) |
||||
Long-term investments |
|
(1,850 |
) |
|
- |
|
||||
Trademarks and other intangibles |
|
(22 |
) |
|
(44 |
) |
||||
Net cash used in investing activities |
|
(3,253 |
) |
|
(451 |
) |
||||
Cash flows from financing activities: | ||||||||||
Repayment of bank borrowings |
|
- |
|
|
(11,140 |
) |
||||
Dividends paid |
|
(7,940 |
) |
|
(6,962 |
) |
||||
Stock repurchase |
|
(14,439 |
) |
|
(316 |
) |
||||
Stock awards and options exercised and other changes |
|
(405 |
) |
|
(1,385 |
) |
||||
Other |
|
(85 |
) |
|
- |
|
||||
Net cash used in financing activities |
|
(22,869 |
) |
|
(19,803 |
) |
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(5,026 |
) |
|
(1,249 |
) |
||||
Net change in cash, cash equivalents, and restricted cash |
|
(51,900 |
) |
|
(36,876 |
) |
||||
Cash, cash equivalents, and restricted cash at beginning of period |
|
277,716 |
|
|
224,423 |
|
||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
225,816 |
|
$ |
187,547 |
|
||||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||||
Cash and cash equivalents |
$ |
225,256 |
|
$ |
186,950 |
|
||||
Restricted cash included in other non-current assets |
|
560 |
|
|
597 |
|
||||
Cash, cash equivalents, and restricted cash |
$ |
225,816 |
|
$ |
187,547 |
|
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