Oregon | 000-23939 | 93-0498284 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
COLUMBIA SPORTSWEAR COMPANY | ||
Dated: July 26, 2018 | By: | /S/ JIM A. SWANSON |
Jim A. Swanson | ||
Senior Vice President and Chief Financial Officer |
• | Second quarter net sales increased 21 percent (19 percent constant-currency) to a record $481.6 million. |
• | Second quarter operating income increased to $9.7 million, representing 630 basis points of operating margin expansion to 2.0 percent of net sales. |
• | Second quarter net income increased to $9.7 million, or $0.14 per diluted share. |
• | First half net sales increased 16 percent (13 percent constant-currency) to a record $1,088.9 million. |
• | First half net income increased 124 percent to a record $54.8 million, or $0.77 per diluted share. |
• | Inventories increased 2 percent to $570.5 million. |
• | Cash and short-term investments totaled $774.7 million at June 30, 2018. |
• | The board of directors approved a regular quarterly dividend of $0.22 per share. |
• | Non-GAAP second quarter net sales increased 19 percent (17 percent constant-currency) to $474.1 million. |
• | Non-GAAP second quarter operating income increased to $11.6 million, representing 580 basis points of operating margin expansion to 2.5 percent of net sales. |
• | Non-GAAP second quarter net income increased to $11.3 million, or $0.16 per diluted share. |
• | Non-GAAP first half net sales increased 14 percent (11 percent constant-currency) to $1,073.2 million. |
• | Non-GAAP first half net income increased 136 percent to $65.8 million, or $0.93 per diluted share. |
Full Year 2018 (U.S. Dollar) | ||||
GAAP | Non-GAAP* | |||
Net sales growth | 9.0% to 10.5% | 7.5% to 9.0% | ||
Gross margin expansion | up to 140 bps | up to 60 bps | ||
SG&A expense deleverage | 120 bps to 140 bps | 20 bps to 40 bps | ||
Licensing Income | up to $15.0 million | up to $15.0 million | ||
Income from operations | $286 to $295 million | $306 to $315 million | ||
Operating margin | 10.6% to 10.8% | 11.5% to 11.7% | ||
Effective income tax rate | approximately 22%** | approximately 22%** | ||
Net income | $223 to $230 million | $239 to $246 million | ||
Diluted earnings per share | $3.15 to $3.25 | $3.37 to $3.47 |
• | drive brand awareness and sales growth through increased, focused demand creation investments; |
• | enhance consumer experience and digital capabilities in all our channels and geographies; |
• | expand and improve global direct-to-consumer operations with supporting processes and systems; and |
• | invest in our people and optimize our organization across our portfolio of brands." |
• | U.S. net sales increased 18 percent, attributable to mid-teens percent growth in direct-to-consumer ("DTC") and high-teens percent growth in wholesale. The company operated 134 U.S. retail stores at June 30, 2018 compared with 122 at the same time last year. |
• | Latin America Asia Pacific ("LAAP") net sales increased 27 percent (22 percent constant-currency) including the effect of the new revenue accounting standard. LAAP non-GAAP net sales increased 17 percent (13 percent constant-currency) driven by growth from LAAP distributors, China and Japan, partially offset by a decline in Korea. |
• | Europe Middle East and Africa ("EMEA") net sales increased 26 percent (21 percent constant-currency) primarily driven by high-20 percent growth in EMEA distributors and low-20 percent growth in Europe-direct (high-single-digit percent constant-currency). |
• | Canada net sales increased 12 percent (7 percent constant-currency), primarily driven by DTC. |
• | Columbia brand net sales increased 22 percent (20 percent constant-currency) to $414.8 million. |
• | SOREL brand net sales increased 90 percent (85 percent constant-currency) to $11.4 million. |
• | prAna brand net sales increased 9 percent to $38.1 million. |
• | Mountain Hardwear brand net sales decreased 1 percent to $16.0 million. |
• | Apparel, Accessories and Equipment net sales increased 20 percent (18 percent constant-currency) to $394.6 million. |
• | Footwear net sales increased 26 percent (22 percent constant-currency) to $87.0 million. |
• | Wholesale net sales increased 23 percent (22 percent constant-currency) to $261.2 million. |
• | DTC net sales increased 18 percent (16 percent constant-currency) to $220.4 million. |
June 30, | ||||||||
2018 | 2017 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 510,656 | $ | 620,639 | ||||
Short-term investments | 264,014 | 1,591 | ||||||
Accounts receivable, net(1) | 238,675 | 181,119 | ||||||
Inventories(2) | 570,473 | 559,544 | ||||||
Prepaid expenses and other current assets(2) | 76,399 | 42,053 | ||||||
Total current assets | 1,660,217 | 1,404,946 | ||||||
Property, plant, and equipment, net | 280,726 | 286,006 | ||||||
Intangible assets, net | 128,065 | 131,045 | ||||||
Goodwill | 68,594 | 68,594 | ||||||
Deferred income taxes | 70,351 | 94,514 | ||||||
Other non-current assets | 38,997 | 26,095 | ||||||
Total assets | $ | 2,246,950 | $ | 2,011,200 | ||||
Current Liabilities: | ||||||||
Accounts payable | $ | 290,812 | $ | 264,881 | ||||
Accrued liabilities(1) | 191,511 | 114,807 | ||||||
Income taxes payable | 4,000 | 3,245 | ||||||
Total current liabilities | 486,323 | 382,933 | ||||||
Other long-term liabilities | 45,412 | 44,809 | ||||||
Income taxes payable | 60,827 | 11,102 | ||||||
Deferred income taxes | 13 | 156 | ||||||
Total liabilities | 592,575 | 439,000 | ||||||
Equity: | ||||||||
Columbia Sportswear Company shareholders' equity | 1,640,400 | 1,546,810 | ||||||
Non-controlling interest | 13,975 | 25,390 | ||||||
Total equity | 1,654,375 | 1,572,200 | ||||||
Total liabilities and equity | $ | 2,246,950 | $ | 2,011,200 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales | $ | 481,619 | $ | 398,904 | $ | 1,088,927 | $ | 942,697 | ||||||||
Cost of sales | 252,998 | 218,042 | 560,868 | 503,368 | ||||||||||||
Gross profit | 228,621 | 180,862 | 528,059 | 439,329 | ||||||||||||
47.5 | % | 45.3 | % | 48.5 | % | 46.6 | % | |||||||||
Selling, general and administrative expenses | 222,192 | 200,598 | 465,560 | 413,413 | ||||||||||||
Net licensing income | 3,320 | 2,451 | 6,571 | 4,804 | ||||||||||||
Income (loss) from operations | 9,749 | (17,285 | ) | 69,070 | 30,720 | |||||||||||
Interest income, net | 2,928 | 1,250 | 5,224 | 2,205 | ||||||||||||
Interest expense on note payable to related party | — | (180 | ) | — | (429 | ) | ||||||||||
Other non-operating (expense) income, net | (96 | ) | 360 | (364 | ) | 307 | ||||||||||
Income (loss) before income tax | 12,581 | (15,855 | ) | 73,930 | 32,803 | |||||||||||
Income tax (expense) benefit | (2,086 | ) | 4,539 | (14,706 | ) | (5,234 | ) | |||||||||
Net income (loss) | 10,495 | (11,316 | ) | 59,224 | 27,569 | |||||||||||
Net income attributable to non-controlling interest | 758 | 219 | 4,380 | 3,098 | ||||||||||||
Net income (loss) attributable to Columbia Sportswear Company | $ | 9,737 | $ | (11,535 | ) | $ | 54,844 | $ | 24,471 | |||||||
Earnings (loss) per share attributable to Columbia Sportswear Company: | ||||||||||||||||
Basic | $ | 0.14 | $ | (0.17 | ) | $ | 0.78 | $ | 0.35 | |||||||
Diluted | $ | 0.14 | $ | (0.17 | ) | $ | 0.77 | $ | 0.35 | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 70,021 | 69,672 | 70,050 | 69,639 | ||||||||||||
Diluted | 70,748 | 69,672 | 70,824 | 70,367 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 59,224 | $ | 27,569 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 29,067 | 29,932 | ||||||
Loss on disposal and impairment of property, plant, and equipment | 578 | 441 | ||||||
Deferred income taxes | 2,041 | 3,378 | ||||||
Stock-based compensation | 6,599 | 5,719 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 188,897 | 156,755 | ||||||
Inventories | (140,897 | ) | (61,809 | ) | ||||
Prepaid expenses and other current assets | (6,411 | ) | (3,073 | ) | ||||
Other assets | (11,867 | ) | 2,037 | |||||
Accounts payable | 37,968 | 39,773 | ||||||
Accrued liabilities | (49,781 | ) | (41,523 | ) | ||||
Income taxes payable | (12,835 | ) | (4,133 | ) | ||||
Other liabilities | (3,258 | ) | 1,981 | |||||
Net cash provided by operating activities | 99,325 | 157,047 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of short-term investments | (257,979 | ) | (33,813 | ) | ||||
Sales of short-term investments | 88,794 | 32,878 | ||||||
Capital expenditures | (29,618 | ) | (24,323 | ) | ||||
Proceeds from sale of property, plant, and equipment | 19 | 202 | ||||||
Net cash used in investing activities | (198,784 | ) | (25,056 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from credit facilities | — | 2,774 | ||||||
Repayments on credit facilities | — | (2,774 | ) | |||||
Proceeds from issuance of common stock under employee stock plans | 14,971 | 10,606 | ||||||
Tax payments related to restricted stock unit issuances | (4,131 | ) | (3,539 | ) | ||||
Repurchase of common stock | (40,106 | ) | (35,542 | ) | ||||
Cash dividends paid | (30,856 | ) | (25,046 | ) | ||||
Payment of related party note payable | — | (14,236 | ) | |||||
Net cash used in financing activities | (60,122 | ) | (67,757 | ) | ||||
Net effect of exchange rate changes on cash | (2,929 | ) | 5,016 | |||||
Net increase (decrease) in cash and cash equivalents | (162,510 | ) | 69,250 | |||||
Cash and cash equivalents, beginning of period | 673,166 | 551,389 | ||||||
Cash and cash equivalents, end of period | $ | 510,656 | $ | 620,639 | ||||
Supplemental disclosures of non-cash investing and financing activities: | ||||||||
Capital expenditures incurred but not yet paid | $ | 4,009 | $ | 9,191 | ||||
Dividend to noncontrolling interest declared but not yet paid | $ | 21,332 | $ | — |
Three Months Ended June 30, 2018 | |||||||||||||||||||
GAAP Measures (As Reported) | Adjust for Project CONNECT Costs (1) | Adjust for Effects of ASC 606 (2) | Adjust for Effects of the TCJA (3) | Non-GAAP Measures | |||||||||||||||
Net sales | $ | 481,619 | $ | — | $ | (7,487 | ) | $ | — | $ | 474,132 | ||||||||
Cost of sales | 252,998 | — | — | — | 252,998 | ||||||||||||||
Gross profit | 228,621 | — | (7,487 | ) | — | 221,134 | |||||||||||||
Selling, general and administrative expenses | 222,192 | (1,884 | ) | (7,487 | ) | — | 212,821 | ||||||||||||
Net licensing income | 3,320 | — | — | — | 3,320 | ||||||||||||||
Income from operations | 9,749 | 1,884 | — | — | 11,633 | ||||||||||||||
Non-operating income, net | 2,832 | — | — | — | 2,832 | ||||||||||||||
Income before income tax | 12,581 | 1,884 | — | — | 14,465 | ||||||||||||||
Income tax expense | (2,086 | ) | (448 | ) | — | 136 | (2,398 | ) | |||||||||||
Net income | 10,495 | 1,436 | — | 136 | 12,067 | ||||||||||||||
Net income attributable to non-controlling interest | 758 | — | — | — | 758 | ||||||||||||||
Net income attributable to Columbia Sportswear Company | $ | 9,737 | $ | 1,436 | $ | — | $ | 136 | $ | 11,309 | |||||||||
Earnings per share attributable to Columbia Sportswear Company: | |||||||||||||||||||
Basic | $ | 0.14 | $ | 0.16 | |||||||||||||||
Diluted | $ | 0.14 | $ | 0.16 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 70,021 | 70,021 | |||||||||||||||||
Diluted | 70,748 | 70,748 |
Six Months Ended June 30, 2018 | |||||||||||||||||||
GAAP Measures (As Reported) | Adjust for Project CONNECT Costs (1) | Adjust for Effects of ASC 606 (2) | Adjust for Effects of the TCJA (3) | Non-GAAP Measures | |||||||||||||||
Net sales | $ | 1,088,927 | $ | — | $ | (15,744 | ) | $ | — | $ | 1,073,183 | ||||||||
Cost of sales | 560,868 | — | — | — | 560,868 | ||||||||||||||
Gross profit | 528,059 | — | (15,744 | ) | — | 512,315 | |||||||||||||
Selling, general and administrative expenses | 465,560 | (12,878 | ) | (15,744 | ) | — | 436,938 | ||||||||||||
Net licensing income | 6,571 | — | — | — | 6,571 | ||||||||||||||
Income from operations | 69,070 | 12,878 | — | — | 81,948 | ||||||||||||||
Non-operating income, net | 4,860 | — | — | — | 4,860 | ||||||||||||||
Income before income tax | 73,930 | 12,878 | — | — | 86,808 | ||||||||||||||
Income tax expense | (14,706 | ) | (3,065 | ) | — | 1,179 | (16,592 | ) | |||||||||||
Net income | 59,224 | 9,813 | — | 1,179 | 70,216 | ||||||||||||||
Net income attributable to non-controlling interest | 4,380 | — | — | — | 4,380 | ||||||||||||||
Net income attributable to Columbia Sportswear Company | $ | 54,844 | $ | 9,813 | $ | — | $ | 1,179 | $ | 65,836 | |||||||||
Earnings per share attributable to Columbia Sportswear Company: | |||||||||||||||||||
Basic | $ | 0.78 | $ | 0.94 | |||||||||||||||
Diluted | $ | 0.77 | $ | 0.93 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 70,050 | 70,050 | |||||||||||||||||
Diluted | 70,824 | 70,824 |
Three Months Ended June 30, 2017 | |||||||||||
GAAP Measures (As Reported) | Adjust for Project CONNECT Costs (1) | Non-GAAP Measures | |||||||||
Net sales | $ | 398,904 | $ | — | $ | 398,904 | |||||
Cost of sales | 218,042 | — | 218,042 | ||||||||
Gross profit | 180,862 | — | 180,862 | ||||||||
Selling, general and administrative expenses | 200,598 | (4,052 | ) | 196,546 | |||||||
Net licensing income | 2,451 | — | 2,451 | ||||||||
Loss from operations | (17,285 | ) | 4,052 | (13,233 | ) | ||||||
Non-operating income, net | 1,430 | — | 1,430 | ||||||||
Loss before income tax | (15,855 | ) | 4,052 | (11,803 | ) | ||||||
Income tax benefit | 4,539 | (1,482 | ) | 3,057 | |||||||
Net loss | (11,316 | ) | 2,570 | (8,746 | ) | ||||||
Net income attributable to non-controlling interest | 219 | — | 219 | ||||||||
Net loss attributable to Columbia Sportswear Company | $ | (11,535 | ) | $ | 2,570 | $ | (8,965 | ) | |||
Loss per share attributable to Columbia Sportswear Company: | |||||||||||
Basic | $ | (0.17 | ) | $ | (0.13 | ) | |||||
Diluted | $ | (0.17 | ) | $ | (0.13 | ) | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 69,672 | 69,672 | |||||||||
Diluted | 69,672 | 69,672 |
Six Months Ended June 30, 2017 | |||||||||||
GAAP Measures (As Reported) | Adjust for Project CONNECT Costs (1) | Non-GAAP Measures | |||||||||
Net sales | $ | 942,697 | $ | — | $ | 942,697 | |||||
Cost of sales | 503,368 | — | 503,368 | ||||||||
Gross profit | 439,329 | — | 439,329 | ||||||||
Selling, general and administrative expenses | 413,413 | (5,345 | ) | 408,068 | |||||||
Net licensing income | 4,804 | — | 4,804 | ||||||||
Income from operations | 30,720 | 5,345 | 36,065 | ||||||||
Non-operating income, net | 2,083 | — | 2,083 | ||||||||
Income before income tax | 32,803 | 5,345 | 38,148 | ||||||||
Income tax expense | (5,234 | ) | (1,916 | ) | (7,150 | ) | |||||
Net income | 27,569 | 3,429 | 30,998 | ||||||||
Net income attributable to non-controlling interest | 3,098 | — | 3,098 | ||||||||
Net income attributable to Columbia Sportswear Company | $ | 24,471 | $ | 3,429 | $ | 27,900 | |||||
Earnings per share attributable to Columbia Sportswear Company: | |||||||||||
Basic | $ | 0.35 | $ | 0.40 | |||||||
Diluted | $ | 0.35 | $ | 0.40 | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 69,639 | 69,639 | |||||||||
Diluted | 70,367 | 70,367 |
Updated Full Year 2018 Financial Outlook | |||||||||
GAAP Measures | Adjust for Project CONNECT Costs(1) | Adjust for Effects of ASC 606(2) | Adjust for Effect of the TCJA (3) | Non-GAAP Measures | |||||
Net sales growth | 9.0% to 10.5% | — | ($40) million | — | 7.5% to 9.0% | ||||
Gross margin expansion | up to 140 bps | — | ($40) million | — | up to 60 bps | ||||
SG&A expense deleverage | 120 bps to 140 bps | ($19) million | ($40) million | — | 20 bps to 40 bps | ||||
Licensing income | up to $15.0 million | — | — | — | up to $15.0 million | ||||
Income from operations | $286 to $295 million | $19 million | — | — | $306 to $315 million | ||||
Operating margin | 10.6% to 10.8% | — | — | — | 11.5% to 11.7% | ||||
Effective income tax rate | approximately 22%(3) | — | — | — | approximately 22%(3) | ||||
Net income | $223 to $230 million | $15 million | — | $1.2 million | $239 to $246 million | ||||
Diluted earnings per share | $3.15 to $3.25 | $0.21 | — | $0.02 | $3.37 to $3.47 |
Three Months Ended June 30, | |||||||||||||||||||
Adjust for | Constant- | Constant- | |||||||||||||||||
Reported | Foreign | currency | Reported | Reported | currency | ||||||||||||||
Net Sales | Currency | Net Sales | Net Sales | Net Sales | Net Sales | ||||||||||||||
2018 | Translation | 2018(1) | 2017 | % Change | % Change(1) | ||||||||||||||
Geographical Net Sales: | |||||||||||||||||||
United States | $ | 280.2 | $ | — | $ | 280.2 | $ | 238.2 | 18% | 18% | |||||||||
LAAP(2) | 100.8 | (3.7 | ) | 97.1 | 79.5 | 27% | 22% | ||||||||||||
EMEA | 85.0 | (3.3 | ) | 81.7 | 67.3 | 26% | 21% | ||||||||||||
Canada | 15.6 | (0.7 | ) | 14.9 | 13.9 | 12% | 7% | ||||||||||||
Total | $ | 481.6 | $ | (7.7 | ) | $ | 473.9 | $ | 398.9 | 21% | 19% | ||||||||
Brand Net Sales: | |||||||||||||||||||
Columbia | $ | 414.8 | $ | (7.1 | ) | $ | 407.7 | $ | 340.5 | 22% | 20% | ||||||||
SOREL | 11.4 | (0.3 | ) | 11.1 | 6.0 | 90% | 85% | ||||||||||||
prAna | 38.1 | — | 38.1 | 35.0 | 9% | 9% | |||||||||||||
Mountain Hardwear | 16.0 | (0.1 | ) | 15.9 | 16.1 | (1)% | (1)% | ||||||||||||
Other | 1.3 | (0.2 | ) | 1.1 | 1.3 | —% | (15)% | ||||||||||||
Total | $ | 481.6 | $ | (7.7 | ) | $ | 473.9 | $ | 398.9 | 21% | 19% | ||||||||
Product Category Net Sales: | |||||||||||||||||||
Apparel, Accessories and Equipment | $ | 394.6 | $ | (5.0 | ) | $ | 389.6 | $ | 329.7 | 20% | 18% | ||||||||
Footwear | 87.0 | (2.7 | ) | 84.3 | 69.2 | 26% | 22% | ||||||||||||
Total | $ | 481.6 | $ | (7.7 | ) | $ | 473.9 | $ | 398.9 | 21% | 19% | ||||||||
Channel Net Sales: | |||||||||||||||||||
Wholesale | $ | 261.2 | $ | (3.9 | ) | $ | 257.3 | $ | 211.6 | 23% | 22% | ||||||||
DTC | 220.4 | (3.8 | ) | 216.6 | 187.3 | 18% | 16% | ||||||||||||
Total | $ | 481.6 | $ | (7.7 | ) | $ | 473.9 | $ | 398.9 | 21% | 19% |
Six Months Ended June 30, | |||||||||||||||||||
Adjust for | Constant- | Constant- | |||||||||||||||||
Reported | Foreign | currency | Reported | Reported | currency | ||||||||||||||
Net Sales | Currency | Net Sales | Net Sales | Net Sales | Net Sales | ||||||||||||||
2018 | Translation | 2018(1) | 2017 | % Change | % Change(1) | ||||||||||||||
Geographical Net Sales: | |||||||||||||||||||
United States | $ | 643.0 | $ | — | $ | 643.0 | $ | 571.4 | 13% | 13% | |||||||||
LAAP(2) | 232.4 | (11.2 | ) | 221.2 | 197.8 | 17% | 12% | ||||||||||||
EMEA | 156.8 | (11.5 | ) | 145.3 | 122.7 | 28% | 18% | ||||||||||||
Canada | 56.7 | (2.7 | ) | 54.0 | 50.8 | 12% | 6% | ||||||||||||
Total | $ | 1,088.9 | $ | (25.4 | ) | $ | 1,063.5 | $ | 942.7 | 16% | 13% | ||||||||
Brand Net Sales: | |||||||||||||||||||
Columbia | $ | 923.6 | $ | (23.2 | ) | $ | 900.4 | $ | 789.6 | 17% | 14% | ||||||||
SOREL | 42.2 | (1.2 | ) | 41.0 | 33.2 | 27% | 23% | ||||||||||||
prAna | 80.4 | — | 80.4 | 73.7 | 9% | 9% | |||||||||||||
Mountain Hardwear | 40.4 | (0.8 | ) | 39.6 | 43.8 | (8)% | (10)% | ||||||||||||
Other | 2.3 | (0.2 | ) | 2.1 | 2.4 | (4)% | (13)% | ||||||||||||
Total | $ | 1,088.9 | $ | (25.4 | ) | $ | 1,063.5 | $ | 942.7 | 16% | 13% | ||||||||
Product Category Net Sales: | |||||||||||||||||||
Apparel, Accessories and Equipment | $ | 884.6 | $ | (17.3 | ) | $ | 867.3 | $ | 769.7 | 15% | 13% | ||||||||
Footwear | 204.3 | (8.1 | ) | 196.2 | 173.0 | 18% | 13% | ||||||||||||
Total | $ | 1,088.9 | $ | (25.4 | ) | $ | 1,063.5 | $ | 942.7 | 16% | 13% | ||||||||
Channel Net Sales: | |||||||||||||||||||
Wholesale | $ | 605.1 | $ | (15.8 | ) | $ | 589.3 | $ | 540.4 | 12% | 9% | ||||||||
DTC | 483.8 | (9.6 | ) | 474.2 | 402.3 | 20% | 18% | ||||||||||||
Total | $ | 1,088.9 | $ | (25.4 | ) | $ | 1,063.5 | $ | 942.7 | 16% | 13% |
• | Second quarter net sales increased 21 percent (19 percent constant-currency) to a record $481.6 million, compared to $398.9 million in the second quarter of 2017. |
• | Second quarter operating income increased to $9.7 million, representing 630 basis points of operating margin expansion to 2.0 percent of net sales, compared to (4.3) percent in the second quarter of 2017. |
• | Second quarter net income increased to $9.7 million, or $0.14 per diluted share, compared to a net loss of $11.5 million, or $(0.17) per share, in the second quarter of 2017. |
• | First half net sales increased 16 percent (13 percent constant-currency) to a record $1,088.9 million, compared to $942.7 million in the first half of 2017. |
• | First half net income increased 124 percent to a record $54.8 million, or $0.77 per diluted share, compared to $24.5 million, or $0.35 per diluted share, in the first half of 2017. |
• | Inventories increased 2 percent to $570.5 million at June 30, 2018, compared to $559.5 million at June 30, 2017. |
• | Cash and short-term investments totaled $774.7 million at June 30, 2018, compared to $622.2 million at June 30, 2017. |
• | The board of directors approved a regular quarterly dividend of $0.22 per share, payable on August 30, 2018 to shareholders of record on August 16, 2018. |
• | Non-GAAP second quarter net sales increased 19 percent (17 percent constant-currency) to $474.1 million, compared to $398.9 million in the second quarter of 2017. |
• | Non-GAAP second quarter operating income increased to $11.6 million, representing 580 basis points of operating margin expansion to 2.5 percent of net sales, compared to (3.3) percent in the second quarter of 2017. |
• | Non-GAAP second quarter net income increased to $11.3 million, or $0.16 per diluted share, compared to a net loss of $9.0 million, or $(0.13) per share, in the second quarter of 2017. |
• | Non-GAAP first half net sales increased 14 percent (11 percent constant-currency) to $1,073.2 million, compared to $942.7 million in the first half of 2017. |
• | Non-GAAP first half net income increased 136 percent to $65.8 million, or $0.93 per diluted share, compared to $27.9 million, or $0.40 per diluted share, in the first half of 2017. |
Three Months Ended June 30, | |||||||||||
GAAP | Non-GAAP | ||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||
(dollars in millions except per share amounts) | |||||||||||
Net sales | $481.6 | $398.9 | 21% | $474.1 | $398.9 | 19% | |||||
Gross margin | 47.5% | 45.3% | 220 bps | 46.6% | 45.3% | 130 bps | |||||
SG&A rate | 46.1% | 50.3% | -420 bps | 44.9% | 49.3% | -440 bps | |||||
Operating income (loss) | $9.7 | $(17.3) | 156% | $11.6 | $(13.2) | 188% | |||||
Operating margin | 2.0% | (4.3)% | 630 bps | 2.5% | (3.3)% | 580 bps | |||||
Net income (loss) | $9.7 | $(11.5) | 184% | $11.3 | $(9.0) | 226% | |||||
Earnings (loss) per diluted share | $0.14 | $(0.17) | 182% | $0.16 | $(0.13) | 223% |
Six Months Ended June 30, | |||||||||||
GAAP | Non-GAAP | ||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||
(dollars in millions except per share amounts) | |||||||||||
Net sales | $1,088.9 | $942.7 | 16% | $1,073.2 | $942.7 | 14% | |||||
Gross margin | 48.5% | 46.6% | 190 bps | 47.7% | 46.6% | 110 bps | |||||
SG&A rate | 42.8% | 43.9% | -110 bps | 40.7% | 43.3% | -260 bps | |||||
Operating income | $69.1 | $30.7 | 125% | $81.9 | $36.1 | 127% | |||||
Operating margin | 6.3% | 3.3% | 300 bps | 7.6% | 3.8% | 380 bps | |||||
Net income | $54.8 | $24.5 | 124% | $65.8 | $27.9 | 136% | |||||
Earnings per diluted share | $0.77 | $0.35 | 120% | $0.93 | $0.40 | 133% |
Full Year 2018 (U.S. Dollar) | ||||
GAAP | Non-GAAP* | |||
Net sales growth | 9.0% to 10.5% (prior 8.0% to 10.0%) | 7.5% to 9.0% (prior 6.5% to 8.5%) | ||
Gross margin expansion | up to 140 bps | up to 60 bps | ||
SG&A expense deleverage | 120 bps to 140 bps (prior 150 bps to 170 bps) | 20 bps to 40 bps (prior 30 bps to 50 bps) | ||
Licensing Income | up to $15.0 million (prior up to $14.0 million) | up to $15.0 million (prior up to $14.0 million) | ||
Income from operations | $286 to $295 million (prior $275 to $285 million) | $306 to $315 million (prior $299 to $308 million) | ||
Operating margin | 10.6% to 10.8% (prior 10.3% to 10.5%) | 11.5% to 11.7% (prior 11.4% to 11.5%) | ||
Effective income tax rate | approximately 22%** | approximately 22%** | ||
Net income | $223 to $230 million (prior $213 to $220 million) | $239 to $246 million (prior $231 to $238 million) | ||
Diluted earnings per share | $3.15 to $3.25 (prior $3.01 to $3.11) | $3.37 to $3.47 (prior $3.27 to $3.37) |
Constant- | |||||||
currency | |||||||
Net Sales (millions) | Net Sales (millions) | Net Sales | Net Sales | ||||
Q2 2018 | Q2 2017 | % Change | % Change | ||||
United States | $280.2 | $238.2 | 18% | 18% | |||
LAAP | 100.8 | 79.5 | 27% | 22% | |||
EMEA | 85.0 | 67.3 | 26% | 21% | |||
Canada | 15.6 | 13.9 | 12% | 7% | |||
Total | $481.6 | $398.9 | 21% | 19% |
• | United States |
▪ | Direct-to-consumer ("DTC") net sales increased mid-teens percent driven by brick & mortar net sales growth including improved store productivity and contribution from new store openings over the prior twelve months, as well as low-20 percent e-commerce net sales growth. |
▪ | Wholesale net sales increased high-teens percent primarily driven by the Columbia brand reflecting increased advance Spring 2018 orders partially aided by a shift in timing of Spring 2018 shipments from the first quarter into the second quarter and increased replenishment orders. |
▪ | The company operated 134 U.S. retail stores at June 30, 2018 (110 outlet; 24 branded) and 4 branded e-commerce sites, compared with 122 stores (98 outlet, 24 branded) and 4 branded e-commerce sites at the same time last year. |
• | Latin America Asia Pacific ("LAAP") |
▪ | LAAP Distributor net sales increased low-50 percent driven by early Fall 2018 deliveries pulling forward from the third quarter into the second quarter. |
▪ | Korea net sales increased mid-30 percent (high-20 percent constant-currency). Excluding $6.4 million of net sales associated with the new revenue accounting standard, Korea non-GAAP net sales decreased mid-single-digit (high-single-digit percent decline constant-currency) due primarily to the exit of the Mountain Hardwear business in that market. |
▪ | China net sales increased low-20 percent (low-teens percent constant-currency), primarily driven by a timing shift in which a higher proportion of Spring 2017 product was shipped in the first quarter of 2017 in advance of our ERP implementation in the second quarter of 2017. |
▪ | Japan net sales increased low-teens percent (low-double-digit percent constant-currency). Excluding $1.1 million of net sales associated with the new revenue accounting standard, Japan non-GAAP net sales increased high-single-digit percent (mid-single-digit percent constant-currency) due to strong DTC net sales. |
• | Europe Middle East and Africa ("EMEA") |
▪ | EMEA Distributor net sales were up high-20 percent driven by increased advance Fall 2018 orders as well as earlier delivery of Fall 2018 shipments. |
▪ | Europe-direct net sales increased low-20 percent (high-single-digit percent constant-currency), driven primarily by the wholesale channel, and to a lesser extent DTC net sales growth. |
• | Canada |
▪ | DTC net sales increased mid-20 percent (high-teens percent constant-currency), driven by new brick & mortar stores and strong e-commerce growth. |
▪ | Wholesale net sales increased low-single-digit percent (flat constant-currency). |
Constant- | |||||||
currency | |||||||
Net Sales (millions) | Net Sales (millions) | Net Sales | Net Sales | ||||
Q2 2018 | Q2 2017 | % Change | % Change | ||||
Columbia | $414.8 | $340.5 | 22% | 20% | |||
SOREL | 11.4 | 6.0 | 90% | 85% | |||
prAna | 38.1 | 35.0 | 9% | 9% | |||
Mountain Hardwear | 16.0 | 16.1 | (1)% | (1)% | |||
Other | 1.3 | 1.3 | —% | (15)% | |||
Total | $481.6 | $398.9 | 21% | 19% |
• | Columbia brand net sales growth was driven by increased net sales in all major markets with growth across apparel and footwear. |
• | SOREL brand net sales growth was driven by U.S. wholesale and U.S. DTC due to favorable demand for the Spring 2018 product line as well as growth in our Europe-direct business. |
• | prAna brand net sales growth was driven by U.S. DTC and wholesale. |
• | Mountain Hardwear brand net sales declined slightly due to the 2017 decision to exit the brand from the Korean market, and lower Europe-direct and U.S. DTC sales, partially offset by net sales growth in U.S. wholesale and international distributor markets. |
Constant- | |||||||
currency | |||||||
Net Sales (millions) | Net Sales (millions) | Net Sales | Net Sales | ||||
Q2 2018 | Q2 2017 | % Change | % Change | ||||
Apparel, Accessories and Equipment | $394.6 | $329.7 | 20% | 18% | |||
Footwear | 87.0 | 69.2 | 26% | 22% | |||
Total | $481.6 | $398.9 | 21% | 19% |
• | Apparel, Accessories and Equipment net sales increased in the Columbia and prAna brands, partially offset by a slight decrease in sales in the Mountain Hardwear brand. |
• | Footwear net sales increased in both the Columbia and SOREL brands. |
Constant- | |||||||
currency | |||||||
Net Sales (millions) | Net Sales (millions) | Net Sales | Net Sales | ||||
Q2 2018 | Q2 2017 | % Change | % Change | ||||
Wholesale | $261.2 | $211.6 | 23% | 22% | |||
DTC | 220.4 | 187.3 | 18% | 16% | |||
Total | $481.6 | $398.9 | 21% | 19% |
• | changes in classification under the new revenue accounting standard; |
• | higher proportion of full price product sales; and |
• | favorable effects from foreign currency hedge rates; partially offset by |
• | a higher proportion of sales to independent international distributors, which generally carry lower gross margins. |
• | increased expenses to support our expanding global DTC operations; |
• | changes in classification under the new revenue accounting standard; |
• | increased demand creation spending; |
• | the unfavorable impact of strengthening foreign currencies relative to the U.S. dollar; and |
• | increased incentive compensation expense. |
Full Year 2018 (U.S. Dollar) | ||||
GAAP | Non-GAAP* | |||
Net sales growth | 9.0% to 10.5% (prior 8.0% to 10.0%) | 7.5% to 9.0% (prior 6.5% to 8.5%) | ||
Gross margin expansion | up to 140 bps | up to 60 bps | ||
SG&A expense deleverage | 120 bps to 140 bps (prior 150 bps to 170 bps) | 20 bps to 40 bps (prior 30 bps to 50 bps) | ||
Licensing Income | up to $15.0 million (prior up to $14.0 million) | up to $15.0 million (prior up to $14.0 million) | ||
Income from operations | $286 to $295 million (prior $275 to $285 million) | $306 to $315 million (prior $299 to $308 million) | ||
Operating margin | 10.6% to 10.8% (prior 10.3% to 10.5%) | 11.5% to 11.7% (prior 11.4% to 11.5%) | ||
Effective income tax rate | approximately 22%** | approximately 22%** | ||
Net income | $223 to $230 million (prior $213 to $220 million) | $239 to $246 million (prior $231 to $238 million) | ||
Diluted earnings per share | $3.15 to $3.25 (prior $3.01 to $3.11) | $3.37 to $3.47 (prior $3.27 to $3.37) |
• | U.S. net sales growth of a high-single-digit percent, consisting of low-teens percent growth in DTC net sales and mid-single-digit percent growth in wholesale net sales. |
• | EMEA net sales increase of mid-teens percent (low-double-digit percent constant-currency), consisting of a mid-teens percent increase (low-double-digit percent constant-currency) in Europe-direct, and a low-teens percent increase in our EMEA distributor business. |
• | LAAP net sales increase of mid-single-digit percent (low-single-digit percent constant-currency), including: |
◦ | China net sales increase of high-single-digit percent (mid-single-digit percent constant-currency); |
◦ | Japan net sales increase of high-single-digit percent (mid-single-digit percent constant-currency); |
◦ | Korea net sales decrease of low-single-digit percent decline (low-single-digit percent decline constant-currency); and |
◦ | LAAP distributor net sales decline of mid-single-digit percent. |
• | Mid-single-digit percent net sales growth in Canada (high-single-digit percent constant-currency). |
• | a benefit from changes in classification under the new revenue accounting standard; |
• | a higher proportion of higher margin full-price versus closeout product sales; |
• | favorable effects of foreign currency hedge rates; and |
• | a favorable channel mix with a greater proportion of higher gross margin DTC net sales. |
• | net sales growth of mid-single-digit to high-single-digit percent in the second half of the year; |
• | second half operating income to be down slightly to the comparable 2017 period; |
• | second half net income of $168 million to $175 million and diluted earnings per share of $2.38 to $2.48; |
• | non-GAAP net sales growth of mid-single-digit percent in the second half of the year; |
• | SG&A expense deleverage in the second half of the year due to the timing of accelerated investment in our strategic priorities; |
• | second half non-GAAP operating income to be down slightly to the comparable 2017 period; and |
• | second half non-GAAP net income of $173 million to $180 million and diluted earnings per share of $2.45 to $2.55. |
• | mid-single-digit percent third quarter net sales growth; |
• | a slight decrease in third quarter net income resulting in diluted earnings per share contraction of up to $0.05; |
• | mid-single-digit percent third quarter non-GAAP net sales growth; and |
• | a slight decrease in third quarter non-GAAP net income resulting in diluted earnings per share contraction of up to $0.05. |
• | driving brand awareness and sales growth through increased, focused demand creation investments; |
• | enhancing consumer experience and digital capabilities in all our channels and geographies; |
• | expanding and improving global DTC operations with supporting processes and systems; and |
• | investing in our people and optimizing our organization across our portfolio of brands. |