Movado Group, Inc. Announces First Quarter Results
~ First Quarter Revenue of
~First Quarter Operating Income of
~ Reiterates Fiscal 2020 Outlook ~
~ Board Declares Quarterly Dividend ~
First Quarter Fiscal 2020 Highlights:
-
Net sales of
$146.5 million , representing an increase of 15.3%, or 18.9% on a constant dollar basis -
Operating income of
$5.0 million versus$8.1 million in the prior year period -
Adjusted operating income of
$7.2 million inclusive of incremental investment spend to support growth and$1.4 million in net unfavorable currency versus adjusted operating income of$8.9 million in the prior year period -
First quarter diluted EPS of
$0.17 versus$0.35 in the first quarter of fiscal 2019 -
Adjusted diluted EPS of
$0.24 includes$0.06 per share impact from a higher tax rate, as compared to adjusted diluted EPS of$0.37 in the first quarter of fiscal 2019
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
First quarter Fiscal 2020 results of operations included the following charges:
$1.5 million pre-tax charge, or$1.1 million after tax, representing$0.05 per diluted share, associated with the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to the acquisition of MVMT; and$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 Olivia Burton
First quarter Fiscal 2019 results of operations included the following charges:
$0.8 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 Olivia Burton.
First Quarter Fiscal 2020 Results (see attached table for GAAP and non-GAAP measures)
-
Net sales increased 15.3% to
$146.5 million compared to$127.1 million in the first quarter of last year. Net sales on a constant dollar basis increased 18.9% compared to net sales for the first quarter of fiscal 2019. -
Gross profit was
$78.9 million , or 53.8% of net sales, compared to$67.5 million , or 53.1% of net sales, in the first quarter of last year. Adjusted gross profit for the first quarter of fiscal 2020, which excludes$0.1 million in adjustments associated with the amortization of acquisition accounting adjustments related to the MVMT acquisition, was$79.0 million , or 53.9% of net sales as compared to 53.1% in the first quarter of last year. The 80 bps increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix as well as increased leverage on fixed costs due to increased sales, partially offset by unfavorable foreign currency exchange rates. -
Operating expenses were
$73.9 million , compared to$59.4 million in the first quarter of last year. For the first quarter of fiscal 2020, adjusted operating expenses were$71.9 million , which excludes$0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and$1.3 million in adjustments associated with the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to the MVMT acquisition. For the first quarter of fiscal 2019, adjusted operating expenses were$58.6 million , which excludes$0.8 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton. The increase in adjusted operating expenses was primarily due to higher marketing expenses primarily due to the addition of MVMT and the addition of other operating expenses to support our overall sales growth across our portfolio as well as a new joint venture inSpain . -
Operating income was
$5.0 million compared to operating income of$8.1 million in the same period last year. Adjusted operating income for the first quarter of fiscal 2020 was$7.2 million , which excludes$0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and$1.5 million in adjustments associated with the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to MVMT. Adjusted operating income for the first quarter of fiscal 2019, which excludes$0.8 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton, was$8.9 million . -
The Company recorded a tax provision of
$0.8 million , compared to a tax benefit of$0.1 million in the first quarter of last year. The first quarter of fiscal 2020 included a benefit of$0.1 million associated with the amortization of acquired intangible assets related to Olivia Burton and a$0.4 million benefit related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to MVMT. The first quarter of fiscal 2019 included a benefit of$0.1 million associated with the amortization of acquired intangible assets related to Olivia Burton and favorable discrete items including the release of a valuation allowance against certain foreign deferred tax assets. Based upon adjusted pre-tax income, the adjusted provision for income taxes was$1.3 million in the first quarter of fiscal 2020 versus$5,000 in the first quarter of fiscal 2019. -
Net income was
$3.9 million , or$0.17 per diluted share, compared to net income of$8.1 million , or$0.35 per diluted share, in the same quarter last year. In the first quarter of fiscal 2020, adjusted net income was$5.6 million , or$0.24 per diluted share, which excludes expenses of$0.6 million , net of$0.1 million of tax, associated with the amortization of acquired intangible assets related to Olivia Burton and$1.1 million , net of$0.4 million of tax, related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to MVMT. For the first quarter of fiscal 2019, adjusted net income was$8.7 million , or$0.37 per diluted share, which excludes expenses of$0.6 million , net of$0.1 million of tax, associated with the amortization of acquired intangible assets related to Olivia Burton.
Fiscal 2020 Outlook
The Company is reiterating its outlook for fiscal 2020. As previously
stated, the Company will focus on the continued integration of MVMT into
its systems and logistics platforms, while also making significant brand
building investments across its portfolio. The fiscal 2020 outlook
includes these investments, partially offset by the realization of
anticipated infrastructure and supply chain synergies in the third and
fourth quarters. As such, the Company continues to anticipate that net
sales will be in a range of
Quarterly Dividend and Share Repurchase Program
The Company announced that on
During the first quarter of fiscal 2020, the Company repurchased
approximately 78,400 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)
MOVADO GROUP, INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
April 30, | ||||||||
2019 |
2018 |
|||||||
Net sales | $ | 146,549 | $ | 127,149 | ||||
Cost of sales | 67,676 | 59,625 | ||||||
Gross profit | 78,873 | 67,524 | ||||||
Operating expenses | 73,899 | 59,385 | ||||||
Operating income | 4,974 | 8,139 | ||||||
Interest expense | (224 | ) | (222 | ) | ||||
Interest income | 21 | 57 | ||||||
Income before income taxes | 4,771 | 7,974 | ||||||
Provision/(benefit) for income taxes | 847 | (141 | ) | |||||
Net income | 3,924 | 8,115 | ||||||
Less: Net loss attributable to noncontrolling interests | (1 | ) | - | |||||
Net income attributable to Movado Group, Inc. | $ | 3,925 | $ | 8,115 | ||||
Diluted Income Per Share Information | ||||||||
Net income attributable to Movado Group, Inc. | $ | 0.17 | $ | 0.35 | ||||
Weighted diluted average shares outstanding | 23,452 | 23,448 | ||||||
MOVADO GROUP, INC. | ||||||||
GAAP AND NON-GAAP MEASURES | ||||||||
(In thousands, except for percentage data) | ||||||||
(Unaudited) | ||||||||
As Reported | ||||||||
Three Months Ended | ||||||||
April 30, | % Change | |||||||
2019 |
2018 |
|||||||
Total net sales, as reported | $ | 146,549 | $ | 127,149 | 15.3% | |||
Total net sales, constant dollar basis | $ | 151,213 | $ | 127,149 | 18.9% | |||
MOVADO GROUP, INC. | ||||||||||||||||||||||
GAAP AND NON-GAAP MEASURES | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Net Sales | Gross Profit |
Operating |
Pre-tax |
Provision/(Benefit) |
Net Income |
Diluted EPS | ||||||||||||||||
Three Months Ended April 30, 2019 | ||||||||||||||||||||||
As Reported (GAAP) | $ | 146,549 | $ | 78,873 | $ | 4,974 | $ | 4,771 | $ | 847 | $ | 3,925 | $ | 0.17 | ||||||||
Olivia Burton Costs (1) | - | - | 712 | 712 | 135 | 577 | 0.02 | |||||||||||||||
MVMT Costs (2) | - | 140 | 1,473 | 1,473 | 354 | 1,119 | 0.05 | |||||||||||||||
Adjusted Results (Non-GAAP) | $ | 146,549 | $ | 79,013 | $ | 7,159 | $ | 6,956 | $ | 1,336 | $ | 5,621 | $ | 0.24 | ||||||||
Three Months Ended April 30, 2018 | ||||||||||||||||||||||
As Reported (GAAP) | $ | 127,149 | $ | 67,524 | $ | 8,139 | $ | 7,974 | $ | (141 | ) | $ | 8,115 | $ | 0.35 | |||||||
Olivia Burton Costs (1) | - | - | 767 | 767 | 146 | 621 | 0.02 | |||||||||||||||
Adjusted Results (Non-GAAP) | $ | 127,149 | $ | 67,524 | $ | 8,906 | $ | 8,741 | $ | 5 | $ | 8,736 | $ | 0.37 | ||||||||
(1) Related to the amortization of acquired intangible assets for Olivia Burton. | ||||||||||||||||||||||
(2) Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT. | ||||||||||||||||||||||
MOVADO GROUP, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
April 30, | January 31, | April 30, | |||||||
2019 |
2019 |
2018 |
|||||||
ASSETS |
|||||||||
Cash and cash equivalents | $ | 150,712 | $ | 189,911 | $ | 176,959 | |||
Trade receivables, net | 85,715 | 84,026 | 79,965 | ||||||
Inventories | 178,048 | 165,311 | 159,032 | ||||||
Other current assets | 32,631 | 28,898 | 36,213 | ||||||
Total current assets | 447,106 | 468,146 | 452,169 | ||||||
Property, plant and equipment, net | 26,065 | 26,067 | 23,560 | ||||||
Operating lease right-of-use assets | 87,353 | - | - | ||||||
Deferred and non-current income taxes | 24,913 | 24,503 | 8,157 | ||||||
Goodwill | 135,685 | 136,033 | 58,484 | ||||||
Other intangibles, net | 46,570 | 48,183 | 21,720 | ||||||
Other non-current assets | 60,969 | 56,769 | 48,042 | ||||||
Total assets | $ | 828,661 | $ | 759,701 | $ | 612,132 | |||
LIABILITIES AND EQUITY |
|||||||||
Accounts payable | $ | 37,477 | $ | 38,650 | $ | 29,333 | |||
Accrued liabilities | 44,886 | 44,429 | 37,356 | ||||||
Accrued payroll and benefits | 7,185 | 18,773 | 6,616 | ||||||
Current operating lease liabilities | 13,771 | - | - | ||||||
Income taxes payable | 8,663 | 10,831 | 4,650 | ||||||
Total current liabilities | 111,982 | 112,683 | 77,955 | ||||||
Loans payable to bank, non current | 49,060 | 50,280 | - | ||||||
Deferred and non-current income taxes payable | 29,071 | 29,242 | 32,998 | ||||||
Non-current operating lease liabilities | 79,877 | - | - | ||||||
Other non-current liabilities | 65,394 | 67,120 | 40,231 | ||||||
Redeemable noncontrolling interest | 3,636 | 3,721 | - | ||||||
Shareholders' equity | 489,641 | 496,655 | 460,948 | ||||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 828,661 | $ | 759,701 | $ | 612,132 | |||
MOVADO GROUP, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
April 30, | ||||||||
2019 |
2018 |
|||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 3,925 | $ | 8,115 | ||||
Depreciation and amortization | 3,872 | 3,383 | ||||||
Other non-cash adjustments | 2,002 | (98 | ) | |||||
Changes in working capital | (34,660 | ) | (13,591 | ) | ||||
Changes in non-current assets and liabilities | (754 | ) | (429 | ) | ||||
Net cash used in operating activities | (25,615 | ) | (2,620 | ) | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (2,204 | ) | (1,686 | ) | ||||
Tradenames and other intangibles | (63 | ) | (168 | ) | ||||
Net cash used in investing activities | (2,267 | ) | (1,854 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of bank borrowings | - | (25,000 | ) | |||||
Dividends paid | (4,591 | ) | (4,604 | ) | ||||
Stock repurchase | (2,616 | ) | (1,186 | ) | ||||
Stock awards and options exercised and other changes | (1,234 | ) | 3,105 | |||||
Net cash used in financing activities | (8,441 | ) | (27,685 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,889 | ) | (5,693 | ) | ||||
Net change in cash, cash equivalents, and restricted cash | (39,212 | ) | (37,852 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 190,459 | 215,411 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 151,247 | $ | 177,559 | ||||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
Cash and cash equivalents | $ | 150,712 | $ | 176,959 | ||||
Restricted cash included in other non-current assets | 535 | 600 | ||||||
Cash, cash equivalents, and restricted cash | $ | 151,247 | $ | 177,559 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190530005236/en/
Source:
ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200