Wolverine Worldwide Announces Record Financial Results for Fourth Quarter and Full Year 2011

30 Jan, 2012, 06:30 ET from Wolverine Worldwide

 

ROCKFORD, Mich., Jan. 30, 2012 /PRNewswire/ -- Wolverine Worldwide (NYSE: WWW) today reported record revenue for both the fourth quarter and fiscal year ended December 31, 2011, as well as record earnings per share for the full year.

Highlights for the year:

  • Revenue rose 12.9% to a record $1,409.1 million, driven by double-digit growth from each of the Company's branded operating groups: the Outdoor Group, Lifestyle Group and Heritage Group. Foreign exchange contributed $17.3 million, or 1.4%, to reported revenue growth. This year's revenue represents the second consecutive year of double-digit growth, reflecting strong momentum for the Company's brand portfolio in almost all major geographies.
  • Gross margin of 39.5% was equal to the prior year's reported gross margin, representing outstanding performance in a challenging sourcing and product cost environment.
  • Operating margin expanded to a record 12.1%, compared to prior year reported operating margin of 11.4%.
  • Diluted earnings per share increased 14.3%, to $2.48, compared to prior year adjusted earnings per share of $2.17. Reported full-year earnings per share in 2010 were $2.11.
  • The excellent free cash flow generated in 2011 was used to invest for future growth, fund benefit plans for employees and return value to shareholders through the payout of $22.7 million in dividends and the repurchase of 1.8 million shares for $65.3 million.

"Our portfolio of strong, global lifestyle brands combined to deliver another year of record performance," said Blake W. Krueger, the Company's Chairman and Chief Executive Officer. "Each of our three branded operating groups and our direct-to-consumer business contributed to the year's outstanding results. Additionally, all major international regions reported double-digit revenue growth, as our newly created International Group focused on the significant opportunities outside of North America. Our distributor and licensee business, which markets our brands in nearly 190 countries, also had an exceptional year, with revenue up nearly 40%. We are very proud of the record performance in 2011 and are excited about the global momentum of our brands, our continued geographic expansion and the impressive product innovations we have planned for 2012."

Highlights for the fourth quarter 2011:

  • On top of the prior year's 23.2% fourth quarter revenue growth, revenue in this year's fourth quarter rose 5.6% to $406.5 million, representing the sixth consecutive quarter of record revenue, driven by growth from all branded operating groups.
  • Gross margin in the quarter decreased 20 basis points to 36.9%, with incremental non-cash LIFO expense lowering gross margin by 80 basis points.
  • The Company continued to invest behind its most important growth initiatives, with a double-digit increase in marketing investments in the quarter.
  • Diluted earnings per share during the quarter of $0.47 compares to $0.52 in the prior year, a decrease of 9.6%. Organic growth across the portfolio of brands was offset by i) $0.06 per diluted share in incremental investments to drive accelerated growth; ii) $0.04 per diluted share in incremental non-cash LIFO expense; iii) $0.02 per diluted share in higher tax expense as a result of a lower effective tax rate in the prior year; and iv) a one-time gain on the sale of a non-core business that added $0.02 per diluted share to fourth quarter fiscal 2010 results.

Don Grimes, the Company's Senior Vice President and Chief Financial Officer, commented, "We are extremely pleased with the Company's double-digit increases in both revenue and earnings per share, another record year by both measurements. This exceptional financial performance in 2011 is indicative of the strength of our business model, the drive and focus of our seasoned management team and the discipline with which we manage the business. We remain focused on our goal of delivering superior financial results while increasing brand investments to drive future growth."

The Company's outlook for 2012 reflects the following:

  • The recent strengthening of the U.S. dollar vs. the British pound, the Canadian dollar and the Euro;
  • Revenue in the range of $1.485 billion to $1.525 billion, representing growth of 5.4% to 8.2% versus the prior year;
  • Moderate gross margin expansion;
  • Modest SG&A deleverage reflecting i) approximately $11.1 million, or $0.15 per diluted share, of incremental non-cash pension expense; ii) an estimated $2.5 million, or $0.03 per diluted share, of incremental expenses associated with a significant expansion of the Company's distribution infrastructure in support of future growth; and iii) incremental investments associated with retail store openings;
  • A full-year effective tax rate of approximately 28%;
  • Fully diluted weighted average shares outstanding of approximately 49 million; and
  • Fully diluted earnings per share in the range of $2.60 to $2.70, representing growth of approximately 4.8% to 8.9% versus the prior year. Adjusted for the estimated incremental non-cash pension expense, earnings per share are expected to grow in the range of 10.9% to 14.9%.

Krueger concluded, "We are in a strong position heading into the new year, with several global consumer trends and macro lifestyle trends working in our favor. The expanding footprint of our lifestyle brands and our ability to target many different consumer groups through a variety of distribution channels enables us to outperform in many different economic environments. We are certainly excited about the Company's prospects for 2012."

The Company will host a conference call at 8:30 a.m. EST today to discuss these results and current business trends. To listen to the call at the Company's website, go to www.wolverineworldwide.com, click on "Investor Relations" in the navigation bar, and then click on "Webcasts & Presentations" from the side navigation bar of the "Investor Relations" page. To listen to the webcast, your computer must have a streaming media player, which can be downloaded for free at www.wolverineworldwide.com. In addition, the conference call can be heard at www.streetevents.com. A replay of the call will be available at the Company's website through April 16, 2012.

With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world's leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform footwear and apparel. The Company's portfolio of highly recognized brands includes: Bates®, Chaco®, Cushe®, Hush Puppies®, HYTEST®, Merrell®, Sebago® Soft Style® and Wolverine®. The Company also is the footwear licensee of popular brands including CAT®, Harley-Davidson® and Patagonia®. The Company's products are carried by leading retailers in the U.S. and globally in more than 190 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.

This press release contains forward-looking statements. In addition, words such as "estimates," "anticipates," "believes," "forecasts," "plans," "predicts," "projects," "is likely," "expects," "intends," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Risk Factors include, among others: the Company's ability to successfully develop its brands and businesses; changes in duty structures in countries of import and export including anti-dumping measures and trade defense actions; changes in consumer preferences or spending patterns; cancellation of orders for future delivery, or the failure of the Department of Defense to exercise future purchase options, award new contracts or the cancellation of existing contracts by the Department of Defense or other military purchasers; changes in planned customer demand, re-orders or at-once orders; the availability and pricing of footwear manufacturing capacity; reliance on foreign sourcing; failure of international licensees and distributors to meet sales goals or to make timely payments on amounts owed; disruption of technology systems; regulatory or other changes affecting the supply or price of materials used in manufacturing; the availability of power, labor and resources in key foreign sourcing countries, including China; the impact of competition and pricing; the impact of changes in the value of foreign currencies; the development of new initiatives; the risks of doing business in developing countries, and politically or economically volatile areas; retail buying patterns; consolidation in the retail sector; changes in economic and market conditions; acts and effects of war and terrorism; weather; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and exhibits thereto. Other Risk Factors exist, and new Risk Factors emerge from time to time that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements.

WOLVERINE WORLD WIDE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

($000s, except per share data)

4th Quarter Ended

Fiscal Year Ended

December 31,

January 1,

December 31,

January 1,

2011

2011

2011

2011

Revenue

$ 406,466

$ 385,025

$ 1,409,068

$ 1,248,517

Cost of products sold

256,313

242,291

852,316

754,537

Restructuring and related costs

-

-

-

1,406

Gross Profit

150,153

142,734

556,752

492,574

Gross margin

36.9%

37.1%

39.5%

39.5%

Selling, general and administrative expenses

119,210

111,568

386,534

347,499

Restructuring and related costs

-

-

-

2,828

Operating Expenses

119,210

111,568

386,534

350,327

Operating expenses as a % of revenue

29.3%

29.0%

27.4%

28.1%

Operating Profit

30,943

31,166

170,218

142,247

Operating margin

7.6%

8.1%

12.1%

11.4%

Interest expense, net

378

247

1,025

387

Other (income) expense, net

147

(1,288)

283

(1,366)

525

(1,041)

1,308

(979)

Earnings before income taxes

30,418

32,207

168,910

143,226

Income taxes

7,407

6,560

45,623

38,756

Effective tax rate

24.4%

20.4%

27.0%

27.1%

Net earnings

$ 23,011

$ 25,647

$ 123,287

$ 104,470

Diluted earnings per share

$ 0.47

$ 0.52

$ 2.48

$ 2.11

Supplemental information:

Net earnings used to calculate diluted earnings per share

$ 22,314

$ 25,253

$ 120,990

$ 102,900

Shares used to calculate diluted earnings per share

47,957

48,634

48,728

48,857

Weighted average shares outstanding

48,209

48,805

48,911

49,052

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

($000s)

December 31,

January 1,

2011

2011

ASSETS:

Cash & cash equivalents

$ 140,012

$ 150,400

Receivables

219,963

196,457

Inventories

234,757

208,655

Other current assets

37,314

24,622

Total current assets

632,046

580,134

Property, plant & equipment, net

78,489

74,397

Other assets

138,667

132,044

Total Assets

$ 849,202

$ 786,575

LIABILITIES & EQUITY:

Current maturities on long-term debt

$ 515

$ 517

Accounts payable and other accrued liabilities

149,146

140,638

Total current liabilities

149,661

141,155

Long-term debt

-

517

Other non-current liabilities

124,324

101,006

Stockholders' equity

575,217

543,897

Total Liabilities & Equity

$ 849,202

$ 786,575

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

($000s)

Fiscal Year Ended

December 31,

January 1,

2011

2011

OPERATING ACTIVITIES:

Net earnings

$ 123,287

$ 104,470

Adjustments necessary to reconcile

net earnings to net cash provided by

operating activities:

Depreciation and amortization

15,907

16,201

Deferred income taxes

7,676

(2,747)

Stock-based compensation expense

10,819

10,181

Pension Expense

17,502

16,286

Pension Contribution

(31,800)

(10,400)

Restructuring and other transition costs

-

4,234

Cash payments related to restructuring

(984)

(7,516)

Other

6,271

6,405

Changes in operating assets and liabilities

(69,864)

(69,248)

Net cash provided by operating activities

78,814

67,866

INVESTING ACTIVITIES:

Additions to property, plant and equipment

(19,397)

(16,370)

Other

(3,186)

(668)

Net cash used in investing activities

(22,583)

(17,038)

FINANCING ACTIVITIES:

Net borrowings under revolver

11,000

-

Cash dividends paid

(22,737)

(21,414)

Purchase of common stock for treasury

(67,388)

(52,190)

Other

16,808

14,455

Net cash used in financing activities

(62,317)

(59,149)

Effect of foreign exchange rate changes

(4,302)

(1,718)

Decrease in cash and cash equivalents

(10,388)

(10,039)

Cash and cash equivalents at beginning of year

150,400

160,439

Cash and cash equivalents at end of year

$ 140,012

$ 150,400

WOLVERINE WORLD WIDE, INC.

REVENUE BY OPERATING GROUP

(Unaudited)

($000s)

4th Quarter Ended

December 31, 2011

January 1, 2011

Change

Revenue

% of Total

Revenue

% of Total

$

%

Outdoor Group

$ 141,084

34.7%

$ 134,947

35.1%

$ 6,137

4.5%

Heritage Group

158,365

39.0%

151,399

39.3%

6,966

4.6%

Lifestyle Group

57,286

14.1%

50,531

13.1%

6,755

13.4%

Other

5,043

1.2%

4,079

1.1%

964

23.6%

Total branded footwear, apparel

and licensing revenue

361,778

89.0%

340,956

88.6%

20,822

6.1%

Other business units

44,688

11.0%

44,069

11.4%

619

1.4%

Total Revenue

$ 406,466

100.0%

$ 385,025

100.0%

$ 21,441

5.6%

Fiscal Year Ended

December 31, 2011

January 1, 2011

Change

Revenue

% of Total

Revenue

% of Total

$

%

Outdoor Group

$ 551,789

39.2%

$ 467,612

37.5%

$ 84,177

18.0%

Heritage Group

500,283

35.5%

454,563

36.4%

45,720

10.1%

Lifestyle Group

206,276

14.6%

182,892

14.6%

23,384

12.8%

Other

15,719

1.1%

12,577

1.0%

3,142

25.0%

Total branded footwear, apparel

and licensing revenue

1,274,067

90.4%

1,117,644

89.5%

156,423

14.0%

Other business units

135,001

9.6%

130,873

10.5%

4,128

3.2%

Total Revenue

$ 1,409,068

100.0%

$ 1,248,517

100.0%

$ 160,551

12.9%

As required by the Securities and Exchange Commission Regulation G, the following tables contain information regarding the non-GAAP adjustments used by the Company in the presentation of its financial results:

WOLVERINE WORLD WIDE, INC.

RECONCILIATION OF REPORTED FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS, EXCLUDING RESTRUCTURING AND RELATED COSTS*

(Unaudited)

($000s, except per share data)

As Reported

As Adjusted

Fiscal Year Ended

Restructuring and

Fiscal Year Ended

January 1, 2011

Related Costs (a)

January 1, 2011

Diluted earnings per share

$ 2.11

$ 0.06

$ 2.17

RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE, EXCLUDING INCREMENTAL PENSION EXPENSE*

(Unaudited)

Full-Year 2012

Full-Year 2012

Guidance

Incremental Pension

Guidance

(GAAP Basis)

Expense (b)

As Adjusted

Diluted earnings per share

$ 2.60 - 2.70

$ 0.15

$ 2.75 - 2.85

Percentage change from

prior year

4.8% - 8.9%

10.9% - 14.9%

(a) This adjustment presents the Company's results of operations on a continuing basis without the effects of fluctuations in restructuring and related costs. The adjusted financial results are used by management to, and allows investors to, evaluate the operating performance of the Company on a comparable basis.

(b) This adjustment presents the Company's 2012 outlook of operations on a continuing basis without the effects of fluctuations in non-cash pension expense. The adjusted financial outlook is used by management to, and allows investors to, evaluate the future operating performance of the Company on a comparable basis.

* To supplement the consolidated financial statements presented in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures. Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitution for, financial information prepared in accordance with GAAP. A reconciliation of all non-GAAP measures included in this press release, to the most directly comparable GAAP measures, are found in the financial tables above.

SOURCE Wolverine Worldwide



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http://www.wolverineworldwide.com