Company reaffirms earnings guidance and
updates revenue outlook for full year to reflect recent business
model changes
Wolverine World Wide, Inc. (NYSE: WWW) today reported financial
results for the first quarter ended March 30, 2024.
“We delivered better-than-expected revenue and earnings in the
first quarter, and we are beginning to see proof points emerge as
early validation of our strategy and execution – including record
gross margin in the quarter, acceleration in our direct-to-consumer
business, improving order trends across our wholesale operations,
and a healthier balance sheet,” said Chris Hufnagel, President and
Chief Executive Officer of Wolverine Worldwide. “We’re executing
our turnaround and transformation with pace and continue to make
meaningful progress towards realizing the full potential of our
brands, platforms, and teams. While we have more work to do, I’m
encouraged by the great work of our teams and the power of our
brand-building model – focused squarely on creating awesome
products, telling amazing stories, and driving the business each
and every day.”
FINANCIAL HIGHLIGHTS
Financial results for 2024, and comparable results from 2023, in
each case, for our ongoing business exclude the impact of Keds,
which was sold in February 2023, the U.S. Wolverine Leathers
business, which was sold in August 2023, the non-U.S. Wolverine
Leathers business, which was sold in December 2023, and the Sperry
business, which was sold in January 2024. Tables have been provided
in the back of this release showing the impact of these adjustments
on financial results for 2024 and 2023.
FIRST-QUARTER 2024 FINANCIAL HIGHLIGHTS
(in millions)
March 30, 2024
April 1, 2023
Y/Y Change
Constant Currency
Change
Reported Segment Revenue
Results:
Active Group
$289.8
$385.9
(24.9)%
(25.6)%
Work Group
$90.1
$114.5
(21.3)%
(21.7)%
Other
$15.0
$99.0
(84.8)%
(84.8)%
Total Revenue
$394.9
$599.4
(34.1)%
(34.6)%
Ongoing Total Revenue
$390.8
$517.5
(24.5)%
(25.1)%
Supplemental Revenue
Information
Merrell
$133.0
$180.3
(26.2)%
(26.6)%
Saucony
$100.1
$132.6
(24.5)%
(24.7)%
Wolverine
$41.2
$51.7
(20.3)%
(20.3)%
Sweaty Betty
$45.2
$47.5
(4.8)%
(8.1)%
International - Reported
$178.5
$260.6
(31.5)%
International - Ongoing
$178.5
$239.1
(25.3)%
Direct-to-Consumer - Reported
$106.4
$126.5
(15.9)%
Direct-to-Consumer - Ongoing
$103.6
$110.5
(6.2)%
Reported Financial Metrics
Gross Margin
45.9%
39.4%
650 bps
Selling, General & Administrative
$184.5
$191.0
(3.4)%
Operating Margin
(0.8)%
7.6%
(840) bps
Diluted Earnings Per Share
($0.19)
$0.23
182.6%
Non-GAAP and Ongoing Business
Financial Metrics
Adjusted Gross Margin
46.5%
41.1%
540 bps
Adjusted Selling, General &
Administrative
$162.2
$180.8
(10.3)%
Adjusted Operating Margin
5.0%
6.1%
(110) bps
Adjusted Diluted Earnings Per Share
$0.05
$0.11
(54.5)%
Constant Currency Earnings Per Share
$0.09
$0.11
(18.2)%
Gross margin improved significantly due to lower supply
chain costs, lower sales of end-of-life inventory, less promotional
eCommerce sales and favorable distribution channel mix.
Inventory at the end of the quarter was $354.3 million
and was down $371.6 million or approximately 51.2% compared to the
prior year and down $19.3 million from the prior year end.
Net Debt at the end of the quarter was $685 million, down
$380 million compared to the prior year and down $55 million from
the prior year end.
FULL-YEAR 2024 OUTLOOK
“The Company exceeded first quarter revenue expectations with
well-balanced performance across the portfolio,” said Mike
Stornant, Executive Vice President and Chief Financial Officer. “We
drove 540 basis points of gross margin expansion from a healthy
sales mix and our profit improvement actions initiated last year.
We also continued to strengthen the balance sheet by reducing
inventory for our ongoing business by $251 million year-over-year
and net debt by $55 million since year-end 2023 – both nicely ahead
of our plan. We remain on track to achieve our financial objectives
for the year, and we are encouraged by the progress we have made in
such a short time frame.”
Full year 2024 outlook is as follows:
- Revenue from our ongoing business is now expected to be
approximately $1.68 billion to $1.73 billion, which is adjusted for
the new licensing model recently announced on May 1 for our Merrell
and Saucony kids business. This range represents a decline compared
to 2023 of approximately 15.7% to 13.2% and constant currency
decline of approximately 15.5% and 13.0%.
- Gross margin is expected to be approximately 44.5% up
460 basis points compared to 2023.
- Operating margin is expected to be approximately 5.7%
and adjusted operating margin is expected to be approximately 7.0%,
up 310 basis points compared to 2023.
- The effective tax rate is expected to be approximately
18%.
- Diluted earnings per share are expected to be between
$0.43 and $0.63, and adjusted diluted earnings per share are
expected to be between $0.65 and $0.85. These full-year EPS
projections include an approximate $0.10 negative impact from
foreign currency exchange rate fluctuations.
- Diluted weighted average shares are expected to be
approximately 80 million.
- Inventory is now expected to decline by at least $75
million by year end.
- Net Debt at year end is now expected to be approximately
$565 million, a reduction of $175 million from the prior year
end.
NON-GAAP FINANCIAL MEASURES
Measures referred to in this release as “adjusted” financial
results and the financial results of the "ongoing business" are
non-GAAP measures. Adjusted financial results exclude environmental
and other related costs net of recoveries, non-cash impairment of
long-lived assets, reorganization costs, and gain on the sale of
businesses, trademarks and long-lived assets. The financial results
of the ongoing business exclude financial results from the Sperry
business, Keds business and Wolverine Leathers business. The
Company also presents constant currency information, which is a
non-GAAP measure that excludes the impact of fluctuations in
foreign currency exchange rates. The Company calculates constant
currency basis by converting the current-period local currency
financial results using the prior period exchange rates and
comparing these adjusted amounts to the Company's current period
reported results. The Company believes providing each of these non-
GAAP measures provides valuable supplemental information regarding
its results of operations, consistent with how the Company
evaluates performance.
The Company has provided a reconciliation of each of the above
non-GAAP financial measures to the most directly comparable GAAP
financial measure. The Company believes these non-GAAP measures
provide useful information to both management and investors because
they increase the comparability of current period results to prior
period results by adjusting for certain items that may not be
indicative of core operating results and enable better
identification of trends in our business. The adjusted financial
results are used by management to, and allow investors to, evaluate
the operating performance of the Company on a comparable basis.
Management does not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
EARNINGS CALL INFORMATION
The Company will host a conference call today at 8:30 a.m. ET to
discuss these results and current business trends. The conference
call will be broadcast live and accessible under the “Investor
Relations” tab at www.wolverineworldwide.com. A replay of the
conference call will be available on the Company’s website for a
period of approximately 30 days.
ABOUT WOLVERINE WORLDWIDE
Founded in 1883, Wolverine World Wide, Inc. (NYSE:WWW) is one of
the world’s leading marketers and licensors of branded casual,
active lifestyle, work, outdoor sport, athletic, children's and
uniform footwear and apparel. The Company's diverse portfolio of
highly recognized brands includes Merrell®, Saucony®, Sweaty
Betty®, Hush Puppies®, Wolverine®, Chaco®, Bates®, HYTEST®, and
Stride Rite®. Wolverine Worldwide is also the global footwear
licensee of the popular brands Cat® and Harley-Davidson®. Based in
Rockford, Michigan, for more than 140 years, the Company's products
are carried by leading retailers in the U.S. and globally in
approximately 170 countries and territories. For additional
information, please visit our website,
www.wolverineworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements,
including statements regarding the Company’s turnaround and
transformation; the Company's outlook for 2024 including, among
others: reported, adjusted and constant currency revenue; reported
and adjusted gross margin; reported and adjusted operating margin;
reported and adjusted net earnings; effective tax rate; reported
and adjusted diluted earnings per share; diluted weighted average
shares; and net debt; as well as statements regarding the Company's
progress towards realizing the full potential of its brands,
platforms and teams, and the Company's commitment to delivering
long-term sustainable growth and greater value for shareholders. In
addition, words such as “estimates,” “anticipates,” “believes,”
“forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,”
“outlook,” “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, inflationary pressures 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; changes in duties, tariffs,
quotas or applicable assessments in countries of import and export;
foreign currency exchange rate fluctuations; currency restrictions;
supply chain or other capacity constraints, production disruptions,
quality issues, price increases or other risks associated with
foreign sourcing; the cost, including the effect of inflationary
pressures, and availability of raw materials, inventories, services
and labor for contract manufacturers; labor disruptions; changes in
relationships with, including the loss of, significant wholesale
customers; risks related to the significant investment in, and
performance of, the Company’s consumer-direct operations; risks
related to expansion into new markets and complementary product
categories; the impact of seasonality and unpredictable weather
conditions; the impact of changes in general economic conditions
and/or the credit markets on the Company’s manufacturers,
distributors, suppliers, joint venture partners and wholesale
customers; changes 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, including compliance with federal, state and local laws and
regulations relating to the protection of the environment,
environmental remediation and other related costs, and litigation
or other legal proceedings relating to the protection of the
environment or environmental effects on human health; risks of
breach of the Company’s databases or other systems, or those of its
vendors, which contain certain personal information, payment card
data or proprietary information, due to cyberattack or other
similar events; problems affecting the Company’s supply chain and
distribution system, including service disruptions 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; risks relating to stockholder activism;
the potential effects of outbreaks of COVID-19 or future health
crises on the Company’s business, operations, financial results and
liquidity; the risk of impairment to goodwill and other
intangibles; 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 or other
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) (In millions, except earnings per
share)
Quarter Ended
March 30, 2024
April 1, 2023
Revenue
$
394.9
$
599.4
Cost of goods sold
213.5
363.1
Gross profit
181.4
236.3
Gross margin
45.9
%
39.4
%
Selling, general and administrative
expenses
176.8
212.0
Gain on sale of business, trademarks and
long-lived assets
—
(20.1
)
Impairment of long-lived assets
6.1
—
Environmental and other related costs
(income), net of recoveries
1.6
(0.9
)
Operating expenses
184.5
191.0
Operating expenses as a % of revenue
46.7
%
31.9
%
Operating profit (loss), net
(3.1
)
45.3
Operating margin
(0.8
)%
7.6
%
Interest expense, net
12.0
15.8
Other expense (income), net
(0.8
)
1.2
Total other expenses
11.2
17.0
Earnings (loss) before income taxes
(14.3
)
28.3
Income tax expense (benefit)
(0.6
)
10.3
Effective tax rate
4.1
%
36.3
%
Net earnings (loss)
(13.7
)
18.0
Less: net earnings (loss) attributable to
noncontrolling interests
0.8
(1.0
)
Net earnings (loss) attributable to
Wolverine World Wide, Inc.
$
(14.5
)
$
19.0
Diluted earnings (loss) per share
$
(0.19
)
$
0.23
Supplemental information:
Net earnings (loss) used to calculate
diluted earnings (loss) per share
$
(14.8
)
$
18.6
Shares used to calculate diluted earnings
(loss) per share
79.8
79.2
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In millions)
March 30, 2024
April 1, 2023
ASSETS
Cash and cash equivalents
$
169.7
$
116.2
Accounts receivables, net
231.2
251.2
Inventories, net
354.3
725.9
Current assets held for sale
—
22.1
Other current assets
70.7
87.2
Total current assets
825.9
1,202.6
Property, plant and equipment, net
92.6
140.5
Lease right-of-use assets
112.9
172.2
Goodwill and other indefinite-lived
intangibles
599.3
743.3
Other noncurrent assets
222.3
158.1
Total assets
$
1,853.0
$
2,416.7
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and other accrued
liabilities
$
418.8
$
536.6
Lease liabilities
36.5
39.3
Current maturities of long-term debt
10.0
10.0
Borrowings under revolving credit
agreements
265.0
450.0
Total current liabilities
730.3
1,035.9
Long-term debt
581.9
720.8
Lease liabilities, noncurrent
126.6
150.9
Other noncurrent liabilities
154.1
164.6
Stockholders' equity
260.1
344.5
Total liabilities and stockholders'
equity
$
1,853.0
$
2,416.7
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)
Quarter Ended
March 30, 2024
April 1, 2023
OPERATING ACTIVITIES:
Net earnings (loss)
$
(13.7
)
$
18.0
Adjustments to reconcile net earnings
(loss) to net cash used in operating activities:
Depreciation and amortization
7.1
8.5
Deferred income taxes
—
(3.8
)
Stock-based compensation expense
4.1
4.5
Pension and SERP expense
(0.2
)
0.4
Impairment of long-lived assets
6.1
—
Environmental and other related costs, net
of cash payments
(10.0
)
(1.3
)
Gain on sale of business, trademarks and
long-lived assets
—
(20.1
)
Other
(2.6
)
(1.4
)
Changes in operating assets and
liabilities
(28.0
)
(102.6
)
Net cash used in operating activities
(37.2
)
(97.8
)
INVESTING ACTIVITIES:
Additions to property, plant and
equipment
(5.1
)
(7.3
)
Proceeds from sale of business, trademarks
and long-lived assets, net of cash disposed of
92.5
81.9
Other
(2.0
)
(0.1
)
Net cash provided by investing
activities
85.4
74.5
FINANCING ACTIVITIES:
Payments under revolving credit
agreements
(146.0
)
(225.0
)
Borrowings under revolving credit
agreements
106.0
250.0
Proceeds from company-owned insurance
policies
7.0
—
Payments on long-term debt
(24.2
)
(2.5
)
Cash dividends paid
(8.1
)
(8.4
)
Employee taxes paid under stock-based
compensation plans
(1.6
)
(5.5
)
Proceeds from the exercise of stock
options
—
0.1
Net cash provided by (used in) financing
activities
(66.9
)
8.7
Effect of foreign exchange rate
changes
3.8
(0.3
)
Decrease in cash and cash equivalents
(14.9
)
(14.9
)
Cash and cash equivalents at beginning of
the year
184.6
135.5
Cash and cash equivalents at end of the
quarter
$
169.7
$
120.6
The following tables contain information regarding the non-GAAP
financial measures used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE, INC.
Q1 2024 RECONCILIATION TABLES RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED REVENUE ON A CONSTANT CURRENCY
BASIS* (Unaudited) (In millions)
GAAP Basis 2024-Q1
Foreign Exchange
Impact
Constant Currency Basis
2024-Q1
GAAP Basis 2023-Q1
Reported Change
Constant Currency
Change
REVENUE
Active Group
$
289.8
$
(2.6
)
$
287.2
$
385.9
(24.9)%
(25.6)%
Work Group
90.1
(0.5
)
89.6
114.5
(21.3)%
(21.7)%
Other
15.0
—
15.0
99.0
(84.8)%
(84.8)%
Total
$
394.9
$
(3.1
)
$
391.8
$
599.4
(34.1)%
(34.6)%
RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED REVENUE* (Unaudited) (In
millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2024 Q1
$
394.9
$
4.1
$
390.8
Revenue - Fiscal 2023 Q1
$
599.4
$
81.9
$
517.5
(1)
Q1 2024 adjustments reflect the Sperry
business results included in the consolidated condensed statement
of operations. Q1 2023 adjustments reflect results for the Sperry
business, Keds business and Wolverine Leathers business included in
the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
GROSS MARGIN TO ADJUSTED GROSS MARGIN *
(Unaudited) (In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Gross Profit - Fiscal 2024 Q1
$
181.4
$
0.2
$
181.6
Gross margin
45.9
%
46.5
%
Gross Profit - Fiscal 2023 Q1
$
236.3
$
(23.7
)
$
212.6
Gross margin
39.4
%
41.1
%
(1)
Q1 2024 adjustments reflect the Sperry
business results included in the consolidated condensed statement
of operations. Q1 2023 adjustments reflect results for the Sperry
business, Keds business and Wolverine Leathers business included in
the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO ADJUSTED
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES*
(Unaudited) (In millions)
GAAP Basis
Adjustment (1)
Divestiture (2)
As Adjusted
Selling, general and administrative
expenses - Fiscal 2024 Q1
$
184.5
$
(13.7
)
$
(8.6
)
$
162.2
Selling, general and administrative
expenses - Fiscal 2023 Q1
$
191.0
$
16.3
$
(26.5
)
$
180.8
(1)
Q1 2024 adjustments reflect $6.1 million
for impairments of long-lived assets, $6.0 million of
reorganization costs and $1.6 million of environmental and other
related costs net of recoveries. Q1 2023 adjustments reflect the
$20.1 million gain on the divestiture of the Keds business and $0.9
million of environmental and other related costs net of recoveries,
partially offset by $4.7 million of reorganization costs.
(2)
Q1 2024 adjustments reflect the Sperry
business and Wolverine Leathers business results included in the
consolidated condensed statement of operations. Q1 2023 adjustments
reflect results for the Sperry business, Keds business and
Wolverine Leathers business included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
OPERATING MARGIN TO ADJUSTED OPERATING MARGIN*
(Unaudited) (In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Operating Profit - Fiscal 2024 Q1
$
(3.1
)
$
13.7
$
8.8
$
19.4
Operating margin
(0.8
)%
5.0
%
Operating Profit - Fiscal 2023 Q1
$
45.3
$
(16.3
)
$
2.8
$
31.8
Operating margin
7.6
%
6.1
%
(1)
Q1 2024 adjustments reflect $6.1 million
for impairments of long-lived assets, $6.0 million of
reorganization costs and $1.6 million of environmental and other
related costs net of recoveries. Q1 2023 adjustments reflect the
$20.1 million gain on the divestiture of the Keds business and $0.9
million of environmental and other related costs net of recoveries,
partially offset by $4.7 million of reorganization costs.
(2)
Q1 2024 adjustments reflect the Sperry
business and Wolverine Leathers business results included in the
consolidated condensed statement of operations. Q1 2023 adjustments
reflect results for the Sperry business, Keds business and
Wolverine Leathers business included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
DILUTED EPS TO ADJUSTED DILUTED EPS ON A CONSTANT CURRENCY
BASIS* (Unaudited)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Foreign Exchange
Impact
As Adjusted EPS On a
Constant Currency Basis
EPS - Fiscal 2024 Q1
$
(0.19
)
$
0.14
$
0.10
$
0.05
$
0.04
$
0.09
EPS - Fiscal 2023 Q1
$
0.23
$
(0.15
)
$
0.03
$
0.11
(1)
Q1 2024 adjustments reflect impairments of
long-lived assets, reorganization costs and environmental and other
related costs net of recoveries. Q1 2023 adjustment reflects the
gain on the divestiture of the Keds business and environmental and
other related costs net of recoveries, partially offset by
reorganization costs.
(2)
Q1 2024 adjustments reflect the Sperry
business and Wolverine Leathers business results included in the
consolidated condensed statement of operations. Q1 2023 adjustments
reflect results for the Sperry business, Keds business and
Wolverine Leathers business included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
INVENTORY TO ADJUSTED INVENTORY* (Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Inventory - 2024 Q1
$
354.3
$
—
$
354.3
Inventory - 2023 Q4
$
373.6
$
—
$
373.6
Inventory - 2023 Q3
$
563.8
$
100.6
$
463.2
Inventory - 2023 Q2
$
647.9
$
113.3
$
534.6
Inventory - 2023 Q1
$
725.9
$
120.5
$
605.4
(1)
Adjustments reflect the Sperry business
and consolidated China joint ventures inventory included in the
consolidated condensed balance sheet.
DIVESTITURE FINANCIAL SUMMARY
(Unaudited) (In millions, except per share
amounts)
In order to provide visibility regarding the financial impact of
completed divestitures, the Company has provided additional
information within the supplemental table below. The items included
in the tables represent amounts that are reflected in the reported
fiscal 2024 and 2023 results that are related to businesses the
Company has sold. The Company believes providing the following
information is helpful to better understand the impact of the
divestitures on the Company's ongoing business.
Q1
Q2
Q3
Q4
2024 YTD
Revenue - Impact
Sperry business (1)
$
4.1
$
—
$
—
$
—
$
4.1
Total Revenue - Impact
$
4.1
$
—
$
—
$
—
$
4.1
Operating profit - Impact
Sperry business (1)
$
(8.2
)
$
—
$
—
$
—
$
(8.2
)
Wolverine Leathers business (2)
(0.6
)
—
—
—
(0.6
)
Total Operating profit - Impact
$
(8.8
)
$
—
$
—
$
—
$
(8.8
)
Net earnings per share - Impact
$
(0.10
)
$
—
$
—
$
—
$
(0.10
)
Q1
Q2
Q3
Q4
2023 Full-Year
Revenue - Impact
Sperry business (1)
$
62.9
$
57.4
$
46.2
$
40.7
$
207.2
Wolverine Leathers business (2)
12.5
10.9
8.2
5.5
37.1
Keds business (3)
6.5
—
—
—
6.5
Total Revenue - Impact
$
81.9
$
68.3
$
54.4
$
46.2
$
250.8
Operating profit - Impact
Sperry business (1)
$
(2.3
)
$
0.2
$
(4.0
)
$
(4.2
)
$
(10.3
)
Wolverine Leathers business (2)
1.4
0.8
1.1
—
3.3
Keds business (3)
(1.9
)
—
—
—
(1.9
)
Total Operating profit - Impact
$
(2.8
)
$
1.0
$
(2.9
)
$
(4.2
)
$
(8.9
)
Net earnings per share - Impact
$
(0.03
)
$
0.01
$
(0.03
)
$
(0.04
)
$
(0.09
)
(1)
The Sperry® business reflects the revenue
and operating profit from sale of Sperry® products through the sale
of the Sperry® business effective January 10, 2024. The amounts
also include revenue and operating profit associated with Sperry®
stores not included in the divestiture which the Company has closed
or is in the process of closing, costs associated with Sperry®
employees not included in the divestiture transaction and costs
incurred winding down the Sperry® business that are not covered by
the transition service agreement. The Sperry® business revenue and
operating profit will not reoccur after the Company closes all of
the Sperry® stores that were not divested and completes the
transition of the Sperry® business and employees.
(2)
The Wolverine Leathers business line item
reflects revenue and operating profit from the Wolverine Leathers
business that will not reoccur after the Wolverine Leathers
business is sold. The Company divested the U.S. Wolverine Leathers
business in August 2023 and divested the non-U.S. Wolverine
Leathers business in December 2023. The Wolverine Leathers costs
incurred in 2024 are associated with employees not included in the
divestiture transaction.
(3)
The Keds® business line item reflects the
revenue and operating profit from sale of Keds® products that will
not reoccur after the Company's first period in fiscal 2023 as a
result of the sale of the global Keds® business effective February
4, 2023.
RECONCILIATION OF 2023
REPORTED REVENUE TO ADJUSTED REVENUE FOR COMPARISON
TO 2024 GUIDANCE* (Unaudited) (In
millions)
GAAP Basis
Keds and Leathers Divestiture
(1)
Sperry Divestiture (2)
As Adjusted
Revenue - Fiscal 2023
$
2,242.9
$
43.6
$
207.2
$
1,992.1
(1)
Adjustments reflect the Keds business and
Wolverine Leathers business results included in the consolidated
condensed statement of operations.
(2)
Adjustments reflect the Sperry business
results included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
2023 OPERATING MARGIN TO ADJUSTED OPERATING MARGIN FOR
COMPARISON TO 2024 GUIDANCE* (Unaudited) (In
millions)
GAAP Basis
Adjustments (1)
Keds and Leathers Divestiture
(2)
Sperry Divestiture (3)
As Adjusted
Operating Profit (Loss) - Fiscal 2023
$
(68.2
)
$
137.1
$
(1.4
)
$
10.3
$
77.8
Operating margin
(3.0
)%
3.9
%
(1)
Adjustments reflect $185.3 million for a
non-cash impairment of long-lived assets, $47.1 million of
reorganization costs, $5.5 million of costs associated with
divestitures, partially offset by $90.4 million gain on the sale of
businesses, trademarks and long-lived assets and $10.4 million of
environmental and other related costs net of recoveries.
(2)
Adjustments reflect the Keds business and
Wolverine Leathers business results included in the consolidated
condensed statement of operations.
(3)
Adjustments reflect the Sperry business
results included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
2023 DILUTED EPS TO ADJUSTED DILUTED EPS FOR COMPARISON
TO 2024 GUIDANCE* (Unaudited)
GAAP Basis
Adjustments (1)
Keds and Leathers Divestiture
(2)
Sperry Divestiture (3)
As Adjusted
EPS - Fiscal 2023
$
(0.51
)
$
0.57
$
(0.01
)
$
0.10
$
0.15
(1)
Adjustments reflect non-cash impairment of
long-lived assets, reorganization costs, costs associated with
divestitures, debt modification costs, partially offset by gain on
the sale of businesses, trademarks and long-lived assets,
environmental and other related costs net of recoveries, and SERP
curtailment gain.
(2)
Adjustments reflect the Keds business and
Wolverine Leathers business results included in the consolidated
condensed statement of operations.
(3)
Adjustments reflect the Sperry business
results included in the consolidated condensed statement of
operations.
2024 GUIDANCE RECONCILIATION
TABLES RECONCILIATION OF REPORTED GUIDANCE TO ADJUSTED
GUIDANCE, REPORTED DILUTED EPS GUIDANCE TO ADJUSTED DILUTED
EPS GUIDANCE AND SUPPLEMENTAL INFORMATION*
(Unaudited) (In millions, except earnings per
share)
GAAP Basis
Divestiture Adjustments
(1)
Other Adjustments
(2)
As Adjusted
Revenue - Fiscal 2024 Full Year
$1,684 - $1,734
$(4)
$1,680 - $1,730
Gross Margin - Fiscal 2024 Full Year
44.4%
0.1%
44.5%
Operating Margin - Fiscal 2024 Full
Year
5.7%
0.6%
0.7%
7.0%
Dilutive EPS - Fiscal 2024 Full Year
$0.43 -$0.63
$0.10
$0.12
$0.65 - $0.85
Fiscal 2024 Full Year Supplemental
information:
Net Earnings
$35 -$51
$8
$10
$53 - $69
Net Earnings used to calculate diluted
earnings per share
$34 - $50
$8
$10
$52 - $68
Shares used to calculate diluted earnings
per share
79.9
79.9
*
To supplement the consolidated condensed
financial statements presented in accordance with Generally
Accepted Accounting Principles ("GAAP"), the Company describes what
certain financial measures would have been if environmental and
other related costs net of recoveries, non-cash impairment of
long-lived assets and reorganization costs. The financial results
of the ongoing business for 2023 and the first quarter of 2024
exclude financial results from the Sperry business, the Keds
business and Wolverine Leathers business. Adjusted inventory
excludes the Sperry business and the Company’s China joint
ventures. The adjusted 2024 outlook excludes financial results from
the Sperry business and Sperry® stores that were not divested,
which the Company is closing in 2024. The Company believes these
non-GAAP measures provide useful information to both management and
investors by increasing comparability to the prior period by
adjusting for certain items that may not be indicative of the
Company's core ongoing operating business results and to better
identify trends in the Company's ongoing business. The adjusted
financial results are used by management to, and allow investors
to, evaluate the operating performance of the Company on a
comparable basis.
The constant currency presentation, which
is a non-GAAP measure, excludes the impact of fluctuations in
foreign currency exchange rates. The Company believes providing
constant currency information provides valuable supplemental
information regarding results of operations, consistent with how
the Company evaluates performance. The Company calculates constant
currency by converting the current-period local currency financial
results using the prior period exchange rates and comparing these
adjusted amounts to the Company's current period reported
results.
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.
For purposes of providing clarity on year-over-year revenue
comparisons, the below table adjusts 2023 revenue for divestitures
and business model changes.
DIVESTITURE AND BUSINESS MODEL
CHANGES RECONCILIATION OF 2023 REPORTED REVENUE TO
ADJUSTED REVENUE* (Unaudited) (In millions)
Q1
Q2
Q3
Q4
FY
Revenue - Fiscal 2023
$
599.4
$
589.1
$
527.7
$
526.7
$
2,242.9
Adjustment for divestitures (1)
Leathers
(12.5
)
(10.9
)
(8.2
)
(5.5
)
(37.1
)
Keds
(6.5
)
—
—
—
(6.5
)
Sperry
(62.9
)
(57.4
)
(46.2
)
(40.7
)
(207.2
)
Ongoing business (2)
$
517.5
$
520.8
$
473.3
$
480.5
$
1,992.1
Adjustments for 2023 business model
changes (3)
(13.0
)
(13.5
)
(16.9
)
(13.9
)
(57.3
)
Adjustments for 2024 business model
changes (4)
—
(6.7
)
(7.5
)
(3.3
)
(17.5
)
Ongoing business adjusted for business
model changes
$
504.5
$
500.6
$
448.9
$
463.3
$
1,917.3
(1)
Divestitures: Keds sold in February 2023,
Leathers US sold August 2023, Leathers non-US sold December 2023,
Sperry sold in January 2024.
(2)
Ongoing business excludes the impact of
Wolverine Leathers, Keds and Sperry.
(3)
Business model changes occurring in 2023
provided for enhanced comparability, include the impact of Hush
Puppies North America transition to licensing model, Hush Puppies
IP sale, and China joint venture converted to distributor
model.
(4)
Business model changes occurring in 2024
provided for enhanced comparability, include the impact of Merrell
and Saucony Kids transition to licensing model.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508332485/en/
Alex Wiseman (616) 863-3974
Wolverine World Wide (NYSE:WWW)
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