Movado Group, Inc. Announces Third Quarter Results
~ Net Sales Increased 12.3% to
~ Adjusted Operating Income of
~ Increases Full Year Guidance ~
~ Board Declares a
During the third quarter of fiscal 2013, the Company recorded a net tax benefit of
Third Quarter Fiscal 2013
- Net sales increased 12.3% to
$160.2 million compared to$142.6 million in the third quarter of fiscal 2012 led by growth in both the accessible luxury and licensed brand categories. On a constant dollar basis, net sales increased 14.3% compared to the prior year period. - Gross profit was
$90.4 million , or 56.4% of sales, compared to$81.0 million , or 56.8% of sales, in the third quarter last year. The 40 basis point decrease in gross margin percentage was primarily the result of an unfavorable shift in channel and product mix partially offset by the favorable effect of fluctuations in foreign currency exchange rates and leverage gained on certain fixed costs. - Operating expenses increased
$3.5 million , or 5.7%, to$65.4 million compared to$61.9 million in the third quarter last year. Included in operating expenses was a$3.0 million charitable contribution to theMovado Group Foundation . Adjusted operating expenses, which exclude this contribution, were$62.4 million , or 39.0% of net sales compared to$61.9 million , or 43.4% of net sales in the third quarter of fiscal 2012. This$0.5 million increase was primarily the result of higher compensation expense and performance-based compensation, and higher marketing expense, partially offset by the favorable effect of fluctuations in foreign currency exchange rates. - Operating income increased to
$25.0 million compared to operating income of$19.1 million in the same period last year. Excluding the aforementioned charitable contribution, adjusted operating income for the third quarter of fiscal 2013 was$28.0 million . (See attached table for reconciliation of GAAP to non-GAAP measures.) There were no special items in the third quarter of fiscal 2012. - The Company recorded a tax benefit of
$9.9 million , which was impacted by the release of a$19.4 million domestic valuation allowance as well as the aforementioned charitable contribution. The adjusted effective tax rate for the third quarter was 37.1% which compares to 11.0% in the third quarter of fiscal 2012. (See attached table for GAAP and Non-GAAP measures.) The fluctuation in the adjusted effective tax rate was primarily due to the effects of accounting for valuation allowances in the third quarter of fiscal 2012 as well as the application of guidelines related to accounting for income taxes in interim periods in the third quarter of both fiscal 2012 and 2013. - Net income was
$34.5 million , or$1.34 per diluted share compared to net income of$16.4 million , or$0.65 per diluted share, in the third quarter of fiscal 2012. - EBITDA increased to
$27.3 million compared to EBITDA of$22.0 million in the third quarter of fiscal 2012. Excluding the aforementioned charitable contribution, adjusted EBITDA was$30.3 million in the third quarter of fiscal 2013. (See attached table for reconciliation of GAAP to non-GAAP measures.) There were no special items in the third quarter of fiscal 2012.
Nine Month Results Fiscal 2013
- Net sales increased 10.5% to
$381.9 million compared to$345.7 million in the same period of fiscal 2012 driven by growth in both the accessible luxury and licensed brand categories. On a constant dollar basis, net sales increased by 12.7% compared to the prior year period. - Gross profit was
$215.2 million , or 56.4% of sales, compared to$190.6 million , or 55.1% of sales in the same period last year. The 130 basis point increase in gross margin percentage was primarily the result of a favorable shift in channel and product mix, as well as leverage gained on certain fixed costs. This improvement was partially offset by the unfavorable effect of fluctuations in foreign currency exchange rates. - Operating expenses increased
$6.1 million , or 3.7%, to$171.0 million versus$164.9 million in the same period last year. Included in operating expenses for the first nine months of fiscal 2013 was a$3.0 million charitable contribution to theMovado Group Foundation . Excluding this charitable contribution, adjusted operating expenses for the nine month period of fiscal 2013 were$168.0 million , or 44.0% of net sales compared to$164.9 million , or 47.7% of net sales for the nine month period of fiscal 2012. This$3.1 million increase was primarily the result of higher compensation and performance-based compensation expense, and higher marketing expense to drive sales growth, partially offset by the favorable effect of fluctuations in foreign currency exchange rates. - Operating income increased to
$44.2 million compared to operating income of$25.7 million in the same period last year. Excluding the aforementioned charitable contribution in the third quarter of fiscal 2013, adjusted operating income for the nine month period of fiscal year 2013 was$47.2 million . (See attached table for reconciliation of GAAP to non-GAAP measures.) - The Company recorded a tax benefit of
$5.7 million , which was impacted by the release of a$19.4 million domestic valuation allowance as well as the aforementioned charitable contribution. The adjusted effective tax rate for the nine month period was 30.9% which compares to 14.3% in the nine month period in 2012. (See attached table for GAAP and Non-GAAP measures.) The effective tax rate for both periods was impacted by the application of guidelines related to accounting for income taxes in interim periods as well as accounting for valuation allowances in the nine month period of fiscal 2012. - Net income was
$49.2 million , or$1.92 per diluted share, compared to net income for the nine month period of fiscal 2012 of$21.3 million , or$0.85 per diluted share. - EBITDA was
$52.3 million compared to EBITDA of$34.5 million in the same period of fiscal 2012. Excluding the aforementioned charitable contribution, adjusted EBITDA for the nine month period was$55.3 million (See attached table for reconciliation of GAAP to non-GAAP measures.) There were no special items in the third quarter of fiscal 2012.
Rick Coté, President and Chief Operating Officer, stated, "The sustained positive momentum of our business is a testament to the strength of our product, marketing and expansion strategies, as well as the continued focus on our balance sheet. Our cash flow generation provides us with the flexibility to invest in our future growth and at the same time return value to our shareholders. The
Fiscal 2013 Guidance
Based on its strong performance in the third quarter, the Company raised its financial expectations for fiscal 2013. The Company currently expects net sales to increase approximately 10% to
This compares to the Company's previous guidance for fiscal 2013 that included operating income growth of approximately 43-46% to a range of
The Company's guidance is on a comparable basis to non-GAAP results, adjusted for unusual items and now reflects a 30% effective tax rate. The Company's guidance also assumes no additional unusual items or significant fluctuations in foreign currency exchange rates for the remainder of fiscal 2013, but does include anticipated startup infrastructure investment related to the Ferrari branded watch license with no corresponding sales expected in this fiscal year.
Special Cash Dividend and Quarterly Dividend
The Company announced that on
Also on
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 adjusted 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 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 | Nine Months Ended | |||||||||||||||||||||||
October 31, | October 31, | |||||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||||||||||
Net sales | $ | 160,202 | $ | 142,622 | $ | 381,884 | $ | 345,707 | ||||||||||||||||
Cost of sales | 69,783 | 61,588 | 166,682 | 155,104 | ||||||||||||||||||||
Gross profit | 90,419 | 81,034 | 215,202 | 190,603 | ||||||||||||||||||||
Selling, general and administrative | 65,429 | 61,906 | 170,975 | 164,881 | ||||||||||||||||||||
Operating income | 24,990 | 19,128 | 44,227 | 25,722 | ||||||||||||||||||||
Other income | - | - | - | 747 | ||||||||||||||||||||
Interest expense | (69 | ) | (290 | ) | (287 | ) | (988 | ) | ||||||||||||||||
Interest income | 66 | 21 | 84 | 67 | ||||||||||||||||||||
Income before income taxes | 24,987 | 18,859 | 44,024 | 25,548 | ||||||||||||||||||||
(Benefit from) / provision for income taxes | (9,866 | ) | 2,071 | (5,744 | ) | 3,661 | ||||||||||||||||||
Net income | 34,853 | 16,788 | 49,768 | 21,887 | ||||||||||||||||||||
Less: Net income attributed to noncontrolling interests | 380 | 384 | 604 | 584 | ||||||||||||||||||||
Net income attributed to Movado Group, Inc. | $ | 34,473 | $ | 16,404 | $ | 49,164 | $ | 21,303 | ||||||||||||||||
Per Share Information: | ||||||||||||||||||||||||
Net income attributed to Movado Group, Inc. | $ | 1.34 | $ | 0.65 | $ | 1.92 | $ | 0.85 | ||||||||||||||||
Weighted diluted average shares outstanding | 25,710 | 25,108 | 25,598 | 25,105 |
MOVADO GROUP, INC. | |||||||||||||||||||||||
GAAP and Non-GAAP Measures | |||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
As Reported | % Change | ||||||||||||||||||||||
Three Months Ended | % Change | Constant | |||||||||||||||||||||
October 31, | As Reported | Dollar | |||||||||||||||||||||
2012 |
2011 |
||||||||||||||||||||||
Total net sales | $ | 160,202 | $ | 142,622 | 12.3 | % | 14.3 | % | |||||||||||||||
As Reported | % Change | ||||||||||||||||||||||
Nine Months Ended | % Change | Constant | |||||||||||||||||||||
October 31, | As Reported | Dollar | |||||||||||||||||||||
2012 |
2011 |
||||||||||||||||||||||
Total net sales | $ | 381,884 | $ | 345,707 | 10.5 | % | 12.7 | % |
MOVADO GROUP, INC. | ||||||||||||||||||||||||
GAAP and Non-GAAP Measures | ||||||||||||||||||||||||
(In thousands, except percentage and per share data) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
October 31, | October 31, | |||||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||||||||||
Operating income (GAAP) | $ | 24,990 | $ | 19,128 | $ | 44,227 | $ | 25,722 | ||||||||||||||||
Charitable contribution (1) | 3,000 | - | 3,000 | - | ||||||||||||||||||||
Adjusted operating income (non-GAAP) | 27,990 | 19,128 | 47,227 | 25,722 | ||||||||||||||||||||
Depreciation and amortization | 2,344 | 2,891 | 8,036 | 8,791 | ||||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 30,334 | $ | 22,019 | $ | 55,263 | $ | 34,513 | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
October 31, | October 31, | |||||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||||||||||
Income attributed to Movado Group, Inc. (GAAP) | $ | 34,473 | $ | 16,404 | $ | 49,164 | $ | 21,303 | ||||||||||||||||
Charitable contribution (1) | 2,151 | - | 2,151 | - | ||||||||||||||||||||
Valuation allowance (2) | (19,409 | ) | - | (19,409 | ) | - | ||||||||||||||||||
Adjusted income attributed to Movado Group, Inc. (non-GAAP) | $ | 17,215 | $ | 16,404 | $ | 31,906 | $ | 21,303 | ||||||||||||||||
Adjusted effective tax rate (non-GAAP) | 37.1 | % | 11.0 | % | 30.9 | % | 14.3 | % | ||||||||||||||||
Adjusted income per share (non-GAAP) | $ | 0.67 | $ | 0.65 | $ | 1.25 | $ | 0.85 | ||||||||||||||||
Weighted diluted average shares outstanding | 25,710 | 25,108 | 25,598 | 25,105 |
(1) | Reflects a contribution to the Movado Group Foundation. | ||
(2) | Actual taxes in current period primarily reflect the reversal of the valuation allowance on certain of the Company's U.S. net deferred tax assets. |
MOVADO GROUP, INC. | |||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(In thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
October 31, | January 31, | October 31, | |||||||||||||
2012 |
2012 |
2011 |
|||||||||||||
ASSETS |
|||||||||||||||
Cash and cash equivalents | $ | 164,813 | $ | 182,201 | $ | 138,028 | |||||||||
Trade receivables | 107,138 | 62,754 | 95,415 | ||||||||||||
Inventories | 169,668 | 163,680 | 176,092 | ||||||||||||
Other current assets | 34,339 | 25,516 | 25,413 | ||||||||||||
Total current assets | 475,958 | 434,151 | 434,948 | ||||||||||||
Property, plant and equipment, net | 35,541 | 36,290 | 35,585 | ||||||||||||
Deferred income taxes | 26,863 | 14,959 | 7,426 | ||||||||||||
Other non-current assets | 24,009 | 22,162 | 22,120 | ||||||||||||
Total assets | $ | 562,371 | $ | 507,562 | $ | 500,079 | |||||||||
LIABILITIES AND EQUITY |
|||||||||||||||
Accounts payable | $ | 29,770 | $ | 33,814 | $ | 27,252 | |||||||||
Accrued liabilities | 63,494 | 53,083 | 53,006 | ||||||||||||
Deferred and current income taxes payable | 12,842 | 1,015 | 1,617 | ||||||||||||
Total current liabilities | 106,106 | 87,912 | 81,875 | ||||||||||||
Deferred and non-current income taxes payable | 4,548 | 7,291 | 6,548 | ||||||||||||
Other non-current liabilities | 20,318 | 18,285 | 17,807 | ||||||||||||
Noncontrolling interests | 3,102 | 2,708 | 2,774 | ||||||||||||
Shareholders' equity | 428,297 | 391,366 | 391,075 | ||||||||||||
Total liabilities and equity | $ | 562,371 | $ | 507,562 | $ | 500,079 |
MOVADO GROUP, INC. | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
(In thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Nine Months Ended | ||||||||||||||
October 31, | ||||||||||||||
2012 |
2011 |
|||||||||||||
Cash flows from operating activities: | ||||||||||||||
Income from operations | $ | 49,768 | $ | 21,887 | ||||||||||
Depreciation and amortization | 8,036 | 8,791 | ||||||||||||
Other non-cash adjustments | (17,023 | ) | 607 | |||||||||||
Changes in working capital | (34,555 | ) | 1,677 | |||||||||||
Changes in non-current assets and liabilities | (436 | ) | (226 | ) | ||||||||||
Net cash provided by operating activities | 5,790 | 32,736 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Capital expenditures | (6,524 | ) | (4,535 | ) | ||||||||||
Proceeds from sale of an asset held for sale | - | 1,165 | ||||||||||||
Trademarks | (251 | ) | (179 | ) | ||||||||||
Net cash (used in) investing activities | (6,775 | ) | (3,549 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||
Dividends paid | (16,345 | ) | (2,237 | ) | ||||||||||
Other financing | 1,461 | 454 | ||||||||||||
Net cash (used in) financing activities | (14,884 | ) | (1,783 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,519 | ) | 7,608 | |||||||||||
Net change in cash and cash equivalents | (17,388 | ) | 35,012 | |||||||||||
Cash and cash equivalents at beginning of period | 182,201 | 103,016 | ||||||||||||
Cash and cash equivalents at end of period | $ | 164,813 | $ | 138,028 | ||||||||||
Source:
ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200