Wolverine Worldwide Announces Record Second Quarter 2013 Revenue
Wolverine Worldwide (NYSE:WWW) today reported record revenue and strong earnings performance for its second fiscal quarter endedJune 15, 2013. The quarter included a full 12 weeks contribution from the Company'sOctober 2012acquisition of the Sperry Top-Sider, Saucony, Stride Rite, and Keds brands (the "PLG Acquisition").
Second quarter highlights:
·Revenue was a record$587.8 million, up 88.0% versus prior year reported revenue of$312.7 millionand within the Company's expectations going into the quarter. The quarter's revenue was up 5.5% versus prior year pro forma revenue. Sperry Top-Sider, Keds, Saucony, and Harley-Davidson Footwear led the revenue growth in the quarter.
·Reported gross margin increased 320 basis points to a record 41.0%. The strong gross margin performance was balanced across the Company's portfolio of brands and was driven by pricing discipline, favorable brand and channel mix, and better inventory management.
·Excluding acquisition-related transaction and integration expenses, fully diluted earnings per share in the quarter were$0.46, substantially ahead of the Company's previous guidance of$0.31 - $0.35per share and a 12.2% increase compared to the prior year's second quarter earnings adjusted for both acquisition-related transaction and integration costs and a non-recurring tax benefit. The excellent earnings results were driven primarily by better-than-expected earnings from the recently-acquired brands. Reported earnings per share, including acquisition-related transaction and integration expenses, were$0.36in this year's second quarter compared to$0.42in the prior year.
·Operating free cash flow in the fiscal second quarter was a record$165.1 millionand the Company reduced its interest-bearing debt by$73.6 millionin the quarter, including fully paying off its revolving line of credit and a voluntary principal payment of$25 millionon a term loan.
"We are extremely pleased to report excellent financial results in our most recent quarter," saidBlake W. Krueger, Chairman and Chief Executive Officer. "The combined power of our brand portfolio is virtually unmatched in the industry, and the continuing global consumer interest in authentic brands anchored in performance and heritage positions us well for future growth. We continue to believe that the power of our 16-brand portfolio, a strong global infrastructure, and talented team have us poised to deliver growth and exceptional shareholder value."
·Excluding acquisition-related transaction and integration expenses of$7.9 millionin the quarter, operating expenses were$196.2 million, better than plan at 33.4% of revenue, compared to 28.9% of revenue in the prior year's second quarter. Year-over-year SG&A comparisons were impacted by purchase price accounting amortization, a greater percentage of revenue derived from consumer direct activities, incremental pension and incentive compensation expense, as well as investments in key brand marketing initiatives. Reported operating expenses were$204.1 millionin the second quarter.
·Excluding acquisition-related transaction and integration expenses, the effective tax rate in the quarter was 26.6%. The reported tax rate, which benefits from the deductibility of the acquisition-related charges primarily in high statutory tax rate jurisdictions, was 24.2%.
·The Company ended the quarter with net debt of$1.014 billion, down$159 millionfrom the net debt after the close of the PLG Acquisition inOctober 2012.
Today, the Company is reaffirming its full-year revenue guidance in the range of$2.7 to $2.775 billion, representing growth in the range of 6.0% to 8.9% compared to prior year pro forma revenue of$2.548 billion. On the strength of the excellent year-to-date earnings performance, the Company is raising its adjusted earnings per share guidance to a range of$2.60 to $2.75per share, representing growth in the range of 13.5% to 20.1%, compared to prior year adjusted earnings per share of$2.29, and even stronger growth of 23.8% to 31.0% after further adjusting the prior year for$0.19per share of non-recurring tax benefit. On a reported basis, full-year earnings per share for the current fiscal year are now expected in the range of$2.06 to $2.21per share.
The Company will host a conference call at8:30 a.m. EDTtoday 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 atwww.wolverineworldwide.com. In addition, the conference call can be heard atwww.streetevents.com. A replay of the call will be available at the Company's website throughSeptember 30, 2013.
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, athletic, children's, and uniform footwear and apparel. The Company's portfolio of highly recognized brands includes: Merrell®, Sperry Top-Sider®, Hush Puppies®, Saucony®, Wolverine®, Keds®, Stride Rite®, Sebago®, Cushe®, Chaco®, Bates®, HYTEST®, and Soft Style®. The Company also is the global 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 approximately 200 countries and territories. For additional information, please visit our website,www.wolverineworldwide.com.
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