Movado Group, Inc. Announces Third Quarter Results
~ Third Quarter Revenue Increased to
~ Reported EPS of
~ Reiterates Fiscal 2019 Outlook ~
~ Board Declares Quarterly Dividend ~
-
Net sales increased 9.6% to
$208.9 million , or 10.0% on a constant currency basis -
Operating income of
$24.1 million and adjusted operating income of$35.7 million as compared to operating income of$25.2 million and adjusted operating income of$33.6 million in the prior year period -
EPS of
$1.14 and adjusted EPS of$1.18 compared to EPS of$0.75 and adjusted EPS of$1.04 in prior year period
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Third quarter Fiscal 2019 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 Olivia Burton brand; -
$10.9 million pre-tax charge, or$8.1 million after tax, representing$0.34 per diluted share associated with the integration and acquisition of MVMT; and -
$7.6 million other tax benefit, or$0.32 per diluted share, related to the 2017 Tax Act as well as certain discrete foreign tax items.
Third quarter Fiscal 2018 included the following charges and benefits:
-
$1.4 million pre-tax charge, or$1.1 million after tax, representing$0.05 per diluted share, in conjunction with the acquisition of the Olivia Burton brand; and -
$7.0 million pre-tax charge,$5.8 million after tax, representing$0.24 per diluted share, associated with the Company’s cost savings initiatives.
Third Quarter Fiscal 2019 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased 9.6% to
$208.9 million compared to$190.7 million in the third quarter of fiscal 2018. Net sales on a constant dollar basis increased 10.0% compared to net sales in the third quarter of fiscal 2018. -
Gross profit was
$113.4 million , or 54.3% of sales, compared to$104.1 million , or 54.6% of sales, in the third quarter last year. Adjusted gross profit was$113.5 million , or 54.3% of sales, after excluding$0.1 million of amortization of acquisition accounting adjustments related to the MVMT acquisition, compared to the prior year period of$104.7 million , or 54.9% of sales, which primarily excludes$0.6 million of amortization of acquisition accounting adjustments related to the Olivia Burton brand. The decrease in adjusted gross margin percentage was primarily the result of unfavorable channel and product mix and changes in foreign currency exchange rates, partially offset by increased leverage on fixed costs due to increased sales. -
Operating expenses increased
$10.4 million to $89.3 million , compared to$78.9 million in the third quarter last year. Adjusted operating expenses were$77.8 million after excluding$0.7 million of expenses associated with the amortization of acquired intangible assets related to the Olivia Burton brand and$10.8 million of expenses related to the integration and acquisition of MVMT. Adjusted operating expenses in the third quarter of fiscal 2018 were$71.1 million which excludes$0.8 million of expenses and amortization related to the acquisition of the Olivia Burton brand and$7.0 million of expenses related to cost savings initiatives. The increase in adjusted operating expenses was primarily due to increased marketing investments. -
Operating income was
$24.1 million compared to operating income of$25.2 million in the same period last year. Adjusted operating income was$35.7 million , after excluding$0.7 million of expenses associated with the amortization of acquired intangible assets related to the Olivia Burton brand and$10.9 million of expenses related to the integration and acquisition of MVMT. In the third quarter of fiscal 2018, adjusted operating income was$33.6 million , which excludes$1.4 million of expenses and amortization related to the acquisition of the Olivia Burton brand and$7.0 million of expenses related to cost savings initiatives. -
The Company recorded a tax benefit of
$2.8 million , as compared to a tax provision of$7.5 million in the third quarter of fiscal 2018. Based upon adjusted pre-tax income, the adjusted tax provision was$7.8 million or an adjusted tax rate of 21.8% as compared to an adjusted tax provision of$9.0 million or an adjusted tax rate of 27.1% in the third quarter of fiscal 2018. -
Net income was
$26.9 million , or$1.14 per diluted share, compared to net income of$17.4 million , or$0.75 per diluted share, in the third quarter of fiscal 2018. Adjusted net income for the third quarter of fiscal 2019 was$27.9 million , or$1.18 per diluted share, after excluding$0.6 million , net of$0.1 million of tax, of expenses associated with the amortization of acquired intangible assets related to the Olivia Burton brand,$8.1 million , net of$2.8 million of tax, of expenses related to the integration and acquisition of MVMT and a$7.6 million other tax benefit related to the 2017 Tax Act as well as certain discrete foreign tax items. For the third quarter of fiscal 2018, adjusted net income was$24.3 million , or$1.04 per diluted share, which excludes$1.1 million , net of tax, of expenses and amortization related to the acquisition of the Olivia Burton brand, and$5.8 million , net of tax, associated with the cost savings initiatives.
Nine Month Results Fiscal 2019 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased 14.7% to
$480.2 million compared to$418.7 million in the same period of fiscal 2018. Net sales on a constant dollar basis increased 13.1% compared to net sales in the first nine months of fiscal 2018. -
Gross profit was
$258.7 million , or 53.9% of sales, compared to$219.3 million , or 52.4% of sales, in the same period last year. Adjusted gross profit for the first nine months of fiscal 2019, which excludes$0.1 million in amortization of acquisition accounting adjustments related to the MVMT acquisition was$258.9 million , or 53.9% of sales compared to adjusted gross profit for the first nine months of fiscal 2018 of$221.6 million , or 52.9% of sales, which excludes$0.8 million of amortization of acquisition accounting adjustments related to the Olivia Burton brand and$1.4 million in charges related to the cost savings initiatives. The increase in the adjusted gross margin percentage from the first nine months of last year was primarily the result of changes in channel and product mix, favorable changes in foreign currency exchange rates and increased leverage on fixed costs due to increased sales. -
Operating expenses were
$213.6 million as compared to$189.5 million in the same period last year. Adjusted operating expenses for the first nine months of fiscal 2019 were$199.6 million which excludes$2.2 million of amortization expense related to the acquisition of the Olivia Burton brand and$11.8 million of expenses related to the integration and acquisition of MVMT. For the first nine months of fiscal 2018, adjusted operating expenses were$172.4 million , after excluding$5.1 million of expenses and amortization related to the acquisition of the Olivia Burton brand and$12.0 million of expenses related to the cost savings initiatives. The increase in adjusted operating expenses was primarily the result of increased marketing investments, fluctuations in foreign currency exchange rates and higher distribution and selling costs resulting from increased net sales. -
Operating income was
$45.1 million compared to operating income of$29.9 million in the same period last year. Adjusted operating income for the first nine months of fiscal 2019, which excludes$2.2 million of amortization expense related to the acquisition of the Olivia Burton brand and$11.9 million of expenses related to the integration and acquisition of MVMT, was$59.2 million . Adjusted operating income for the first nine months of fiscal 2018 was$49.2 million , which excludes$5.9 million of expenses and amortization related to the acquisition of the Olivia Burton brand and$13.4 million of expenses related to the cost savings initiatives. -
The Company recorded a tax provision of
$0.7 million as compared to$10.3 million for the first nine months of fiscal 2018. Based upon adjusted pre-tax income, the adjusted tax provision was$11.7 million in the first nine months of fiscal 2019 compared to an adjusted tax provision of$13.9 million in the first nine months of fiscal 2018. -
Net income was
$44.2 million , or$1.87 per diluted share, compared to net income for the first nine months of fiscal 2018 of$18.7 million , or$0.80 per diluted share. For the first nine months of fiscal 2019, adjusted net income was$47.3 million , or$2.00 per diluted share, which excludes$1.8 million in amortization expense, net of tax, related to the acquisition of the Olivia Burton brand,$8.9 million , net of tax, related to the integration and acquisition of MVMT and a$7.6 million other tax benefit related to the 2017 Tax Act as well as certain discrete foreign tax items. This compares to adjusted net income for the first nine months of fiscal 2018 of$34.5 million , or$1.48 per diluted share, which excludes$5.5 million of expenses and amortization related to the acquisition of the Olivia Burton brand, net of tax, and$10.3 million of expenses related to cost savings initiatives, net of tax.
Fiscal 2019 Outlook
The Company is reiterating its outlook for fiscal 2019 which excludes
integration and acquisition costs of MVMT and the amortization of
acquisition accounting adjustments relating to the acquisition of Olivia
Burton, as well as the tax benefit related to the 2017 Tax Act and
certain discrete foreign tax items. For fiscal 2019, the Company
continues to anticipate that net sales will be in the range of
Quarterly Dividend and Share Repurchase Program
The Company also announced that on
During the third quarter of fiscal 2019, the Company repurchased 46,800
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 | Nine Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
Net sales | $ | 208,949 | $ | 190,693 | $ | 480,191 | $ | 418,739 | ||||||||
Cost of sales | 95,585 | 86,623 | 221,469 | 199,406 | ||||||||||||
Gross profit | 113,364 | 104,070 | 258,722 | 219,333 | ||||||||||||
Operating expenses | 89,257 | 78,885 | 213,616 | 189,479 | ||||||||||||
Operating income | 24,107 | 25,185 | 45,106 | 29,854 | ||||||||||||
Interest expense | (146 | ) | (445 | ) | (530 | ) | (1,191 | ) | ||||||||
Interest income | 144 | 110 | 258 | 361 | ||||||||||||
Income before income taxes | 24,105 | 24,850 | 44,834 | 29,024 | ||||||||||||
(Benefit)/Provision for income taxes | (2,817 | ) | 7,490 | 657 | 10,341 | |||||||||||
Net income attributed to Movado Group, Inc. | $ | 26,922 | $ | 17,360 | $ | 44,177 | $ | 18,683 | ||||||||
Per Share Information: | ||||||||||||||||
Net income attributed to Movado Group, Inc. | $ | 1.14 | $ | 0.75 | $ | 1.87 | $ | 0.80 | ||||||||
Weighted diluted average shares outstanding | 23,698 | 23,273 | 23,624 | 23,261 | ||||||||||||
MOVADO GROUP, INC. | |||||||||||
GAAP AND NON-GAAP MEASURES | |||||||||||
(In thousands, except for percentage data) | |||||||||||
(Unaudited) | |||||||||||
As Reported | % Change | ||||||||||
Three Months Ended | % Change | Constant | |||||||||
October 31, | As Reported | Dollar | |||||||||
2018 |
2017 |
||||||||||
Total Net sales | $208,949 | $190,693 | 9.6% | 10.0% | |||||||
As Reported | % Change | ||||||||||
Nine Months Ended | % Change | Constant | |||||||||
October 31, | As Reported | Dollar | |||||||||
2018 |
2017 |
||||||||||
Total Net sales | $480,191 | $418,739 | 14.7% | 13.1% | |||||||
MOVADO GROUP, INC. | |||||||||||||||||||||||
GAAP AND NON-GAAP MEASURES | |||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Net Sales | Gross Profit |
Operating |
Pre-tax |
Provision for |
Net Income |
EPS | |||||||||||||||||
Three Months Ended October 31, 2018 |
|||||||||||||||||||||||
As Reported (GAAP) | $ | 208,949 | $ | 113,364 | $ | 24,107 | $ | 24,105 |
-$ |
2,817 |
$ | 26,922 | $ | 1.14 | |||||||||
Olivia Burton Costs (1) | 705 | 705 | 134 | 571 | 0.02 | ||||||||||||||||||
MVMT Costs (2) | 140 | 10,925 | 10,925 | 2,836 | 8,089 | 0.34 | |||||||||||||||||
Other Tax Items (3) | 7,633 | (7,633 | ) | (0.32 | ) | ||||||||||||||||||
Adjusted Results (Non-GAAP) | $ | 208,949 | $ | 113,504 | $ | 35,737 | $ | 35,735 | $ | 7,786 | $ | 27,949 | $ | 1.18 | |||||||||
Three Months Ended October 31, 2017 |
|||||||||||||||||||||||
As Reported (GAAP) | $ | 190,693 | $ | 104,070 | $ | 25,185 | $ | 24,850 | $ | 7,490 | $ | 17,360 | $ | 0.75 | |||||||||
Olivia Burton Costs (1) | 567 | 1,383 | 1,383 | 263 | 1,120 | 0.05 | |||||||||||||||||
Cost Savings Initiatives (4) | 37 | 7,018 | 7,018 | 1,245 | 5,773 | 0.24 | |||||||||||||||||
Adjusted Results (Non-GAAP) | $ | 190,693 | $ | 104,674 | $ | 33,586 | $ | 33,251 | $ | 8,998 | $ | 24,253 | $ | 1.04 | |||||||||
Nine Months Ended October 31, 2018 |
|||||||||||||||||||||||
As Reported (GAAP) | $ | 480,191 | $ | 258,722 | $ | 45,106 | $ | 44,834 | $ | 657 | $ | 44,177 | $ | 1.87 | |||||||||
Olivia Burton Costs (1) | 2,192 | 2,192 | 416 | 1,776 | 0.07 | ||||||||||||||||||
MVMT Costs (2) | 140 | 11,945 | 11,945 | 3,010 | 8,935 | 0.38 | |||||||||||||||||
Other Tax Items (3) | 7,633 | (7,633 | ) | (0.32 | ) | ||||||||||||||||||
Adjusted Results (Non-GAAP) | $ | 480,191 | $ | 258,862 | $ | 59,243 | $ | 58,971 | $ | 11,716 | $ | 47,255 | $ | 2.00 | |||||||||
Nine Months Ended October 31, 2017 |
|||||||||||||||||||||||
As Reported (GAAP) | $ | 418,739 | $ | 219,333 | $ | 29,854 | $ | 29,024 | $ | 10,341 | $ | 18,683 | $ | 0.80 | |||||||||
Olivia Burton Costs (1) | 846 | 5,898 | 5,898 | 387 | 5,511 | 0.24 | |||||||||||||||||
Cost Savings Initiatives (4) | 1,439 | 13,437 | 13,437 | 3,181 | 10,256 | 0.44 | |||||||||||||||||
Adjusted Results (Non-GAAP) | $ | 418,739 | $ | 221,618 | $ | 49,189 | $ | 48,359 | $ | 13,909 | $ | 34,450 | $ | 1.48 | |||||||||
(1) | FY 2019 expense relates to the amortization of certain acquired finite lived assets for the Olivia Burton brand. FY 2018 expense includes the aforementioned amortization expenses as well as transaction charges, and the amortization of certain accounting adjustments associated with the acquisition of the Olivia Burton brand. | |
(2) | Related to integration and acquisition costs, and the amortization of acquired finite lived assets and accounting adjustments associated with acquisition of the MVMT brand. | |
(3) | Related to the impact of the 2017 Tax Act as well as tax benefit of other foreign tax items. | |
(4) | Related to a charge for severance and payroll related, other expenses and occupancy expenses. | |
MOVADO GROUP, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
October 31, | January 31, | October 31, | |||||||
2018 |
2018 |
2017 |
|||||||
ASSETS |
|||||||||
Cash and cash equivalents | $ | 142,668 | $ | 214,811 | $ | 155,484 | |||
Trade receivables, net | 126,106 | 83,098 | 132,941 | ||||||
Inventories | 183,539 | 151,676 | 169,866 | ||||||
Other current assets | 31,590 | 32,015 | 26,361 | ||||||
Total current assets | 483,903 | 481,600 | 484,652 | ||||||
Property, plant and equipment, net | 25,471 | 24,671 | 24,637 | ||||||
Deferred and non-current income taxes | 17,400 | 6,443 | 23,610 | ||||||
Goodwill | 131,756 | 60,269 | 56,316 | ||||||
Other intangibles, net | 47,479 | 23,124 | 22,568 | ||||||
Other non-current assets | 57,907 | 49,273 | 47,783 | ||||||
Total assets | $ | 763,916 | $ | 645,380 | $ | 659,566 | |||
LIABILITIES AND EQUITY |
|||||||||
Loans payable to bank, current | $ | - | $ | 25,000 | $ | 5,000 | |||
Accounts payable | 47,164 | 24,364 | 28,014 | ||||||
Accrued liabilities | 80,291 | 47,943 | 62,666 | ||||||
Income taxes payable | 9,617 | 2,989 | 5,192 | ||||||
Total current liabilities | 137,072 | 100,296 | 100,872 | ||||||
Loans payable to bank | 49,590 | - | 25,000 | ||||||
Deferred and non-current income taxes payable | 29,519 | 33,063 | 7,501 | ||||||
Other non-current liabilities | 66,721 | 41,686 | 38,752 | ||||||
Shareholders' equity | 481,014 | 470,335 | 487,441 | ||||||
Total liabilities and equity | $ | 763,916 | $ | 645,380 | $ | 659,566 | |||
MOVADO GROUP, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
October 31, | ||||||||
2018 |
2017 |
|||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 44,177 | $ | 18,683 | ||||
Depreciation and amortization | 9,907 | 9,842 | ||||||
Other non-cash adjustments | (4,814 | ) | 5,434 | |||||
Cost savings initiatives | - | 13,437 | ||||||
Changes in working capital | (24,760 | ) | (56,087 | ) | ||||
Changes in non-current assets and liabilities | 2,336 | (735 | ) | |||||
Net cash provided by / (used in) operating activities | 26,846 | (9,426 | ) | |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (8,206 | ) | (3,575 | ) | ||||
Acquisition, net of cash acquired | (93,040 | ) | (78,991 | ) | ||||
Restricted cash deposits | - | 1,018 | ||||||
Trademarks and other intangibles | (130 | ) | (500 | ) | ||||
Net cash (used in) investing activities | (101,376 | ) | (82,048 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from bank borrowings | 50,296 | - | ||||||
Repayments of bank borrowings | (25,000 | ) | - | |||||
Dividends paid | (13,855 | ) | (8,953 | ) | ||||
Stock repurchase | (3,931 | ) | (3,004 | ) | ||||
Other financing | 4,863 | (626 | ) | |||||
Net cash provided by (used in) financing activities | 12,373 | (12,583 | ) | |||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (9,986 | ) | 3,262 | |||||
Net change in cash, cash equivalents, and restricted cash | (72,143 | ) | (100,795 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 215,411 | 256,879 | ||||||
Cash, cash equivalents, restricted cash at end of period | $ | 143,268 | $ | 156,084 | ||||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
Cash and cash equivalents | $ | 142,668 | $ | 155,484 | ||||
Restricted cash included in other non-current assets | 600 | 600 | ||||||
Cash, cash equivalents, and restricted cash | $ | 143,268 | $ | 156,084 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181204005327/en/
Source:
ICR, Inc.
Rachel Schacter / Allison Malkin
203-682-8200