Wolverine Worldwide Announces Third-Quarter Results

ROCKFORD, Mich., Oct. 18, 2016 /PRNewswire/ -- Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the third quarter ended September 10, 2016.  Adjusted financial results exclude restructuring and impairment costs as well as debt extinguishment and other costs.  References to underlying revenue indicate reported revenue adjusted for the impact of foreign exchange, retail store closures, and the exit of the Cushe business.

"We delivered strong earnings results on revenue in line with our expectations for the third quarter, despite the tepid retail environment," said Blake W. Krueger, Wolverine Worldwide's Chairman, Chief Executive Officer and President.  "Importantly, we also continued to make excellent progress in strengthening our product innovation pipeline with an intense focus on our consumers.  The Company's position - premised on a core portfolio of global, industry-leading brands - remains strong, and we believe the investments and initiatives we're pursuing today will deliver greater value to shareholders in 2017 and beyond."

THIRD-QUARTER 2016 REVIEW

• Reported revenue of $603.7 million was in line with our expectations, declining 11.1% versus the prior year. Underlying revenue declined 8.6% versus the prior year.
• Reported gross margin of 39.3%, compared to 40.0% in the prior year, was slightly better than expected. Adjusted gross margin on a constant currency basis was 40.0%, flat versus the prior year.
• Reported operating margin was 11.4%, compared to 11.2% in the prior year. Adjusted operating margin on a constant currency basis was 12.2%, up 30 basis points versus the prior year's adjusted operating margin.
• Reported diluted earnings per share were $0.49, compared to $0.44 in the prior year. Adjusted diluted earnings per share were $0.49, in line with our expectations, and, on an adjusted constant currency basis, were $0.51, compared to $0.48 in the prior year.
• Inventory at the end of the quarter was down 7.6% compared to the prior year.
• Cash generated by operating activities in the quarter was a strong $70.4 million, compared to $14.9 million in the prior year.
• The Company successfully issued $250 million of 5.000% Senior Notes due 2026 and, subsequent to the close of the quarter, used the net proceeds together with borrowings under its Senior Credit Facilities and cash on hand to fund the redemption of its outstanding $375 million, 6.125% Senior Notes due 2020.
• The Company announced a new four-year share repurchase program, authorizing up to $300 million in share repurchases that replaces the remaining balance of the Company's 2014 share repurchase program, and repurchased 417,816 shares during the quarter at an average price of $23.55 per share.

"While the macro environment remains challenging, we are pleased with our ability to drive operating margin expansion and earnings per share growth in the quarter," stated Mike Stornant, Senior Vice President and Chief Financial Officer.  "We effectively managed inventory and expenses, generated very strong cash flow, and improved our working capital position, all of which we expect to continue into the fourth quarter.  Looking ahead, we remain focused on driving operational improvements across the portfolio, including a review of strategic alternatives for some areas of the business."

FISCAL 2016 OUTLOOK

The Company's outlook range for full-year reported revenue and adjusted diluted earnings per share remains unchanged.  Given tepid conditions, the Company now expects full-year reported revenue at the lower end of the range and full-year adjusted diluted earnings per share near the midpoint of the range.  Inventory expectations for year end have improved.  The Company's fiscal 2016 outlook ranges are as follows:

• Consolidated reported revenue in the range of $2.475 billion to $2.575 billion, a decline of approximately 8.0% to 4.3%.
• A decline in consolidated underlying revenue of approximately 5.6% to 1.8%, reflecting the updated impact of currency and store closures.
• Reported diluted earnings per share in the range of $1.02 to $1.12, updated to incorporate the impact of debt extinguishment costs.
• Adjusted diluted earnings per share in the range of $1.30 to $1.40. On a constant currency basis, adjusted earnings per share in the range of $1.48 to $1.58.
• Inventory levels to be down low teens by year end versus 2015.

EARNINGS CALL INFORMATION

The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss these results and current business trends.  The conference call will be broadcast live and accessible under the "Investor Relations" tab at wolverineworldwide.com.  A replay of the conference call will be available at the Company's website for a period of approximately 30 days.

ABOUT WOLVERINE WORLDWIDE

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^®, Hush Puppies^®, Saucony^®, Wolverine^®, Keds^®, Stride Rite^®, Sebago^®, Chaco^®, Bates^®, and HYTEST^®.  The Company also is the global footwear licensee of the popular brands Cat^® and Harley-Davidson^®.  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, wolverineworldwide.com

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements, including statements regarding: the Company's ability to successfully execute key strategic initiatives, the Company's ability to accelerate growth and improve earnings performance; the advantages of the Company's diversified business model; the Company's ability to leverage operational strengths to enhance earnings and drive shareholder value; and the Company's fiscal 2016 guidance. In addition, words such as "guidance," "estimates," "anticipates," "believes," "forecasts," "step," "plans," "predicts," "projects," "is likely," "expects," "intends," "should," "will," "confident," 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.  Risk Factors include, among others: changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending in the markets and regions in which the Company's products are sold; the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences; the inability to effectively manage inventory levels; increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export; currency fluctuations; currency restrictions; capacity constraints, production disruptions, quality issues, price increases or other risks associated with foreign sourcing; the cost and availability of raw materials, inventories, services and labor for owned and contract manufacturers; labor disruptions; changes in relationships with, including the loss of, significant wholesale customers; the failure of the U.S. Department of Defense to exercise future purchase options or award new contracts, or the cancellation or modification of existing contracts by the Department of Defense or other military purchasers; risks related to the significant investment in, and performance of, the Company's consumer-direct operations; risks related to the expanding into new markets and complementary product categories as well as consumer-direct operations; the impact of seasonality and unpredictable weather conditions; changes in general economic conditions and/or the credit markets on the Company's distributors, suppliers and customers; increase in the Company's effective tax rates; failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company; the risks of doing business in developing countries, and politically or economically volatile areas; the ability to secure and protect owned intellectual property or use licensed intellectual property; the impact of regulation, regulatory and legal proceedings and legal compliance risks; the potential breach of the Company's databases, or those of its vendors, which contain certain personal information or payment card data; problems affecting the Company's distribution system, including service interruptions at shipping and receiving ports; strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company's success in integrating acquired businesses, and implementing new initiatives and ventures; the risk of impairment to goodwill and other acquired intangibles; the success of the Company's consumer-direct realignment initiatives; changes in future pension funding requirements and pension expenses; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and exhibits thereto. The foregoing Risk Factors, as well as other existing Risk Factors and new Risk Factors that emerge from time to time, 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.

SOURCE Wolverine Worldwide

Related Links

http://www.wolverineworldwide.com