Movado Group, Inc. Announces Fourth Quarter and Fiscal Year 2021 Results
~ Fourth Quarter
~ Operating Income of
~ Ends Fiscal 2021 with Cash of
~ Board Approves New Share Repurchase Program and Declares Quarterly Dividend of
Fiscal Fourth Quarter Highlights (See attached table for GAAP and Non-GAAP measures)
- Delivered topline results ahead of expectations with sequential improvement from the third quarter fiscal 2021
- Drove adjusted gross margin expansion of 220 bps from prior year period to 54.9%
- Decreased adjusted operating expenses from prior year period as a percent of sales 670 bps to 41.6%
-
Generated adjusted operating income of
$23.9 million as compared to$8.3 million in the prior year period -
Acheived adjusted diluted earnings per share of
$0.84 as compared to$0.15 in the prior year period - Tightly managed inventories, which declined 11.0% from prior year
-
Ended the year with cash of
$223.8 million , a$37.9 million increase from$185.9 million at fiscal 2020 year end on$30.7 million less debt
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Fourth quarter fiscal 2021 results of operations included the following charges and benefits:
-
$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 ; -
$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; -
$2.8 million pre-tax benefit, or$1.9 million after tax, representing$0.08 per diluted share, due to change in estimate related to corporate initiative charges recorded primarily in response to the COVID-19 pandemic; and -
$9.2 million income tax benefit, representing$0.39 per diluted share, resulting from the available carryback of NOLs permitted under the CARES Act.
Fourth quarter fiscal 2020 results of operations included the following charges and benefits:
-
Operating expenses included 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 ; -
$1.0 million pre-tax charge, or$0.8 million after tax, representing$0.03 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT; and -
Other non-operating income included a
$1.7 million pre-tax benefit, or$1.3 million after tax, representing$0.06 per diluted share, associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition.
Fourth Quarter Fiscal 2021 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased 6.6% to
$178.3 million compared to$191.0 million in the fourth quarter of fiscal 2020. Net sales on a constant dollar basis decreased 9.1% compared to net sales in the fourth quarter of fiscal 2020. -
Gross profit was
$100.8 million , or 56.5% of net sales, compared to$100.6 million , or 52.7% of net sales in the same period last year. Adjusted gross profit for the fourth quarter of fiscal 2021, which excludes a$2.8 million change in estimate associated with corporate initiative charges recorded primarily in response to the COVID-19 pandemic, was$98.0 million , or 54.9% of net sales. The increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix and favorable foreign currency exchange rates. -
Operating expenses decreased to
$74.9 million in the fourth quarter of fiscal 2021 from$94.0 million in the fourth quarter last year. Adjusted operating expenses for the fourth quarter of fiscal 2021 were$74.1 million compared to adjusted operating expenses of$92.3 million for the fourth quarter of fiscal 2020, both of which exclude the operating expense charges mentioned above in the Non-GAAP Items section for their respective periods. The decrease in adjusted operating expenses was primarily due to the Company’s initiative to minimize all operating expenses, including non-essential operating expenses, such as certain marketing, selling and payroll related expenses. -
Operating income was
$25.9 million compared to operating income of$6.6 million in the fourth quarter of fiscal 2020. Adjusted operating income, which excludes the items listed above in the Non-GAAP Items section, was$23.9 million and$8.3 million for the fourth quarter of fiscal 2021 and fiscal 2020, respectively. -
The Company recorded a tax benefit of
$4.8 million , as compared to a tax provision of$4.6 million in the fourth quarter of fiscal 2020. Based upon adjusted pre-tax income, the adjusted tax provision was$3.7 million , or an adjusted tax rate of 15.6%, as compared to an adjusted tax provision of$4.5 million , or an adjusted tax rate of 56.0%, in the fourth quarter of fiscal 2020. The decrease in the adjusted tax rate is due to the impact of theU.S. tax on GILTI as a result of the mix of jurisdictional earnings. -
Net income was
$30.3 million , or$1.29 per diluted share, compared to net income of$3.5 million , or$0.15 per diluted share, for the same period in the prior year. Adjusted net income for the fiscal 2021 period was$19.7 million , or$0.84 per diluted share, compared to adjusted net income of$3.5 million , or$0.15 per diluted share, for the fourth quarter of fiscal 2020, both of which exclude the fourth quarter items listed above in the Non-GAAP Items section after the associated tax effects for their respective periods.
Full Year Fiscal 2021 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased 27.8% to
$506.4 million compared to net sales of$701.0 million in fiscal 2020. Net sales on a constant dollar basis decreased 28.9% compared to net sales in fiscal 2020. -
Gross profit was
$270.5 million , or 53.4% of net sales, compared to gross profit of$374.9 million , or 53.5% of net sales, in the prior year. Adjusted gross profit for fiscal 2021 was$271.2 million , or 53.6% of net sales, which excludes$0.7 million in corporate initiative charges related to the impact on the business of the COVID-19 pandemic. Adjusted gross profit for fiscal 2020 was$375.0 million , or 53.5% of net sales, which excludes$0.1 million in amortization of acquisition accounting adjustments related to the MVMT acquisition. The slight increase in adjusted gross margin percentage was primarily the result of favorable foreign currency exchange rates. -
Operating expenses were
$412.6 million in fiscal 2021 compared to operating expenses of$331.9 million in the prior year. For fiscal 2021, adjusted operating expenses were$240.5 million , which excludes$155.9 million in adjustments related to the impairment of goodwill and certain intangible assets,$11.9 million in corporate initiative charges related to the impact to the business from the COVID-19 pandemic,$2.7 million of expenses associated with the amortization of acquired intangible assets related toOlivia Burton and$1.6 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition. For fiscal 2020, adjusted operating expenses were$325.0 million , which excludes$4.4 million in expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and$2.8 million of amortization related to the acquisition ofOlivia Burton , partially offset by a$0.3 million change in estimate related to the Company’s cost savings initiatives. The decrease in adjusted operating expenses was primarily due to the Company’s initiative to minimize all operating expense, including non-essential operating expenses, such as certain marketing, selling and payroll related expenses. -
Operating loss was
$142.1 million as compared to operating income of$43.0 million last year. Adjusted operating income for fiscal 2021 was$30.7 million , compared to adjusted operating income of$50.0 million for fiscal 2020, both of which exclude the net charges listed in the preceding bullets for their respective periods. -
The tax benefit was
$31.2 million in fiscal 2021 compared to tax provision of$15.1 million in fiscal 2020. Based upon adjusted pre-tax income, the adjusted effective tax rate for fiscal 2021 was 25.5% as compared to the adjusted effective tax rate of 26.4% in fiscal 2020. -
Net loss was
$111.5 million , or ($4.80 ) per diluted share, for fiscal 2021 compared to net income of$42.7 million , or$1.83 per diluted share, for the prior year. Adjusted net income for fiscal 2021 was$21.4 million , or$0.92 per diluted share, which excludes$131.1 million , net of$24.9 million of tax, in adjustments related to the impairment of goodwill and certain intangible assets,$8.7 million , net of$3.9 million of tax, in corporate initiative charges related to the impact on the business from the COVID-19 pandemic including restructuring,$2.2 million , net of$0.5 million of tax, of expenses associated with the amortization of acquired intangible assets related toOlivia Burton and$1.0 million , net of$0.6 million of tax, in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition, partially offset by$0.8 million , net of$0.5 million of tax, associated with a gain on the sale of a non-operating asset inSwitzerland , and a$9.2 million income tax benefit resulting from the available carryback of NOLs permitted under the CARES Act.
This compares to adjusted net income in fiscal 2020 of$36.5 million or$1.57 per diluted share, which excludes$3.5 million in expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and certain accounting adjustments, net of tax, and$2.3 million of amortization related to the acquisition ofOlivia Burton , net of tax, offset by a a gain of$11.7 million associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition, net of tax, and$0.2 million change in estimate related to the Company’s cost savings initiatives, net of tax.
Fiscal 2022 Outlook
Given the dynamic nature of the COVID-19 crisis, the Company is not providing annual fiscal 2022 outlook at this time. However, given visibility into near term performance, the Company is providing certain expectations for its first quarter of fiscal 2022. With this in mind, the Company currently expects first quarter fiscal 2022 net sales in a range of approximately
Quarterly Dividend and Share Repurchase Program
The Company also announced that on
On
The dividend and share buyback program announced today are consistent with the terms of the Company’s
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 |
|
Twelve Months Ended |
||||||||||
|
|
|
||||||||||
|
|
|
|
|
|
|
||||||
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
||||
Net sales |
|
|
|
|
||||||||
Cost of sales |
77,533 |
90,375 |
235,898 |
326,077 |
||||||||
Gross profit |
100,797 |
100,608 |
270,499 |
374,889 |
||||||||
Operating expenses |
74,912 |
94,005 |
256,707 |
331,898 |
||||||||
Impairment of goodwill and intangible assets |
- |
- |
155,919 |
- |
||||||||
Total operating expenses |
74,912 |
94,005 |
412,626 |
331,898 |
||||||||
Operating income/(loss) |
25,885 |
6,603 |
(142,127) |
42,991 |
||||||||
Non-operating (expense)/income: | ||||||||||||
Gain on sale of a non-operating asset |
- |
- |
1,317 |
- |
||||||||
Other income |
342 |
- |
342 |
- |
||||||||
Change in contingent consideration |
- |
1,729 |
- |
15,356 |
||||||||
Interest expense |
(490) |
(241) |
(1,959) |
(930) |
||||||||
Interest income |
14 |
23 |
45 |
86 |
||||||||
Income/(Loss) before income taxes |
25,751 |
8,114 |
(142,382) |
57,503 |
||||||||
(Benefit)/Provision for income taxes |
(4,823) |
4,581 |
(31,188) |
15,124 |
||||||||
Net income/(loss) |
30,574 |
3,533 |
(111,194) |
42,379 |
||||||||
Less: Net income/(loss) attributable to noncontrolling interests |
309 |
29 |
324 |
(320) |
||||||||
Net income/(loss) attributable to |
|
|
|
|
||||||||
Diluted Income Per Share Information | ||||||||||||
Net income/(loss) attributable to |
|
|
|
|
||||||||
Weighted diluted average shares outstanding |
23,498 |
23,272 |
23,239 |
23,297 |
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 |
|
|
-6.6% |
||||||
Total net sales, constant dollar basis |
|
|
-9.1% |
||||||
As Reported | |||||||||
Twelve Months Ended | |||||||||
% Change | |||||||||
|
|||||||||
2021 |
2020 |
||||||||
Total net sales, as reported |
|
|
-27.8% |
||||||
Total net sales, constant dollar basis |
|
|
-28.9% |
GAAP AND NON-GAAP MEASURES | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
|
|
Gross Profit |
|
Operating Income/ (Loss) |
|
Pre-tax Income/ (Loss) |
|
(Benefit)/Provision for Income Taxes |
|
Net Income/(Loss) Attributable to
|
|
Diluted EPS |
|||
Three Months Ended |
|||||||||||||||
As Reported (GAAP) |
|
|
|
|
|
|
|
||||||||
Olivia Burton Costs (1) |
- |
- |
699 |
699 |
133 |
566 |
0.02 |
||||||||
MVMT Costs (2) |
- |
- |
35 |
35 |
13 |
22 |
0.00 |
||||||||
Corporate Initiatives (3) |
- |
(2,816) |
(2,760) |
(2,760) |
(851) |
(1,909) |
(0.08) |
||||||||
CARES ACT (4) |
- |
- |
- |
- |
9,235 |
(9,235) |
(0.39) |
||||||||
Adjusted Results (Non-GAAP) |
|
|
|
|
|
|
|
||||||||
Three Months Ended |
|||||||||||||||
As Reported (GAAP) |
|
|
|
|
|
|
|
||||||||
Olivia Burton Costs (1) |
- |
- |
709 |
709 |
134 |
575 |
0.03 |
||||||||
MVMT Costs (2) |
- |
- |
1,028 |
1,028 |
247 |
781 |
0.03 |
||||||||
Change In Contingent Consideration (6) |
- |
- |
- |
(1,729) |
(415) |
(1,314) |
(0.06) |
||||||||
Adjusted Results (Non-GAAP) |
|
|
|
|
|
|
|
||||||||
|
|
Gross Profit |
|
Operating (Loss)/ Income |
|
Pre-tax (Loss)/ Income |
|
(Benefit)/Provision for Income Taxes |
|
Net (Loss)/Income Attributable to
|
|
Diluted EPS |
|||
Twelve Months Ended |
|||||||||||||||
As Reported (GAAP) |
|
|
|
|
|
|
|
||||||||
Olivia Burton Costs (1) |
- |
- |
2,732 |
2,732 |
519 |
2,213 |
0.10 |
||||||||
MVMT Costs (2) |
- |
- |
1,571 |
1,571 |
597 |
974 |
0.04 |
||||||||
Corporate Initiatives (5) |
- |
735 |
12,629 |
12,629 |
3,884 |
8,745 |
0.38 |
||||||||
- |
- |
155,919 |
155,919 |
24,867 |
131,052 |
5.64 |
|||||||||
Gain On Sale of a Non-Operating Asset (8) |
- |
- |
- |
(1,317) |
(474) |
(843) |
(0.04) |
||||||||
CARES ACT (4) |
- |
- |
- |
- |
9,235 |
(9,235) |
(0.40) |
||||||||
Adjusted Results (Non-GAAP) |
|
|
|
|
|
|
|
||||||||
Twelve Months Ended |
|||||||||||||||
As Reported (GAAP) |
|
|
|
|
|
|
|
||||||||
Olivia Burton Costs (1) |
- |
- |
2,787 |
2,787 |
529 |
2,258 |
0.10 |
||||||||
MVMT Costs (2) |
- |
140 |
4,562 |
4,562 |
1,095 |
3,467 |
0.15 |
||||||||
Change In Contingent Consideration (6) |
- |
- |
- |
(15,356) |
(3,685) |
(11,671) |
(0.50) |
||||||||
Cost Savings Initiatives (9) |
- |
- |
(320) |
(320) |
(77) |
(243) |
(0.01) |
||||||||
Adjusted Results (Non-GAAP) |
|
|
|
|
|
|
|
(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 change in estimate related to corporate initiative charges recorded primarily in response to the COVID-19 pandemic. | |||||||||||||||
(4) |
Incremental benefit resulting from the available carryback of NOL's permitted under the CARES ACT. | |||||||||||||||
(5) |
Related to provision established associated with corporate initiatives, including restructuring plan. | |||||||||||||||
(6) |
Remeasurement of contingent consideration liability. | |||||||||||||||
(7) |
Related to the impairment of goodwill and impairment of certain of MVMT's intangible assets. | |||||||||||||||
(8) |
Related to a gain on sale of a non-operating asset in |
|||||||||||||||
(9) |
Change in estimate in Fiscal 2020 for severance and occupancy expenses. |
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
2021 |
2020 |
||||||
ASSETS | |||||||
Cash and cash equivalents |
|
|
|||||
Trade receivables, net |
76,931 |
78,388 |
|||||
Inventories |
152,580 |
171,406 |
|||||
Other current assets |
23,479 |
27,000 |
|||||
Income taxes receivable |
24,850 |
1,888 |
|||||
Total current assets |
501,651 |
464,554 |
|||||
Property, plant and equipment, net |
22,349 |
29,238 |
|||||
Operating lease right-of-use assets |
76,070 |
89,523 |
|||||
Deferred and non-current income taxes |
42,507 |
25,403 |
|||||
- |
136,366 |
||||||
Other intangibles, net |
17,081 |
42,359 |
|||||
Other non-current assets |
59,599 |
59,865 |
|||||
Total assets |
|
|
|||||
LIABILITIES AND EQUITY | |||||||
Accounts payable |
|
|
|||||
Accrued liabilities |
51,124 |
44,210 |
|||||
Accrued payroll and benefits |
18,047 |
6,302 |
|||||
Current operating lease liabilities |
15,861 |
15,083 |
|||||
Income taxes payable |
14,452 |
8,217 |
|||||
Total current liabilities |
127,671 |
109,300 |
|||||
Loans payable to bank, non current |
21,230 |
51,910 |
|||||
Deferred and non-current income taxes payable |
21,895 |
25,419 |
|||||
Non-current operating lease liabilities |
68,412 |
81,877 |
|||||
Other non-current liabilities |
50,115 |
48,393 |
|||||
Redeemable noncontrolling interest |
2,600 |
3,165 |
|||||
Shareholders' equity |
425,264 |
526,537 |
|||||
Noncontrolling interest |
2,070 |
707 |
|||||
Total equity |
427,334 |
527,244 |
|||||
Total liabilities, redeemable noncontrolling interest and equity |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Twelve Months Ended |
|||||||
|
|||||||
2021 |
|
2020 |
|||||
Cash flows from operating activities: | |||||||
Net (loss)/income |
|
|
|||||
Impairment of goodwill and intangible assets |
155,919 |
- |
|||||
Non-cash corporate initiatives |
3,722 |
- |
|||||
Change in contingent consideration |
- |
(15,356) |
|||||
Depreciation and amortization |
14,112 |
16,381 |
|||||
Other non-cash adjustments |
(11,120) |
15,617 |
|||||
Changes in working capital |
15,399 |
(25,380) |
|||||
Changes in non-current assets and liabilities |
1,896 |
(1,891) |
|||||
Net cash provided by operating activities |
68,410 |
32,070 |
|||||
Cash flows from investing activities: | |||||||
Capital expenditures |
(3,018) |
(12,713) |
|||||
Acquisitions, net of cash acquired |
- |
(639) |
|||||
Proceeds from sale of a non-operating asset |
1,317 |
- |
|||||
Proceeds from sale of an asset held for sale |
- |
240 |
|||||
Tradenames and other intangibles |
(164) |
(255) |
|||||
Net cash used in investing activities |
(1,865) |
(13,367) |
|||||
Cash flows from financing activities: | |||||||
Repayments of bank borrowings |
(64,465) |
- |
|||||
Proceeds from bank borrowings |
30,879 |
- |
|||||
Dividends paid |
- |
(18,400) |
|||||
Stock repurchase |
- |
(4,199) |
|||||
Stock awards and options exercised and other changes |
(497) |
(1,266) |
|||||
Debt issuance costs |
(300) |
- |
|||||
Net cash used in financing activities |
(34,383) |
(23,865) |
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
5,823 |
1,141 |
|||||
Net change in cash, cash equivalents, and restricted cash |
37,985 |
(4,021) |
|||||
Cash, cash equivalents, and restricted cash at beginning of period |
186,438 |
190,459 |
|||||
Cash, cash equivalents, and restricted cash at end of period |
|
|
|||||
Non-cash financing activities: | |||||||
Dividends declared but not paid |
|
$ - |
|||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents |
|
|
|||||
Restricted cash included in other non-current assets |
612 |
566 |
|||||
Cash, cash equivalents, and restricted cash |
|
|
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