DECK
$126.60
Deckers Outdoor
($.67)
(.53%)
Earnings Details
2nd Quarter September 2018
Thursday, October 25, 2018 4:05:00 PM
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Summary

Deckers Raises Guidance

Deckers Outdoor (DECK) reported 2nd Quarter September 2018 earnings of $2.38 per share on revenue of $501.9 million. The consensus earnings estimate was $1.72 per share on revenue of $493.0 million. Revenue grew 4.0% on a year-over-year basis.

The company said it expects third quarter earnings of $5.10 to $5.25 per share on revenue of $805.0 million to $825.0 million. The current consensus earnings estimate is $5.21 per share on revenue of $800.3 million for the quarter ending December 31, 2018. The company also said it expects fiscal 2019 earnings of $6.65 to $6.85 per share on revenue of $1.935 billion to $1.96 billion. The company's previous guidance was earnings of $6.25 to $6.45 per share on revenue of $1.930 billion to $1.955 billion and the current consensus earnings estimate is $6.45 per share on revenue of $1.95 billion for the year ending March 31, 2019.

Deckers Outdoor Corp is engaged in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities.

Results
Reported Earnings
$2.38
Earnings Whisper
-
Consensus Estimate
$1.72
Reported Revenue
$501.9 Mil
Revenue Estimate
$493.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Deckers Brands Reports Second Quarter Fiscal 2019 Financial Results And Raises Guidance For Full Year Fiscal 2019

GOLETA, Calif., Oct. 25, 2018 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, today announced financial results for the second fiscal quarter ended September 30, 2018. The Company also provided its financial outlook for the third fiscal quarter ending December 31, 2018 and updated its outlook for the full fiscal year ending March 31, 2019.

Deckers Brands Logo (PRNewsfoto/Deckers Brands)

Throughout this release, references to Non-GAAP financial measures exclude the impact of certain charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring charges.  Additional information regarding these Non-GAAP financial measures is set forth under the heading "Non-GAAP Financial Measures" below.

"The continued profitability gains in the UGG brand and top-line growth within the HOKA ONE ONE brand drove second quarter results, as both sales and earnings per share exceeded expectations," said Dave Powers, President and Chief Executive Officer. "Profitability in the second quarter was aided by a 350 basis point increase in gross margin over last year. While a portion of the increase in gross margin came from one-time savings in the quarter, the Company continues to execute well on our long-term plan of improving levels of profitability. Additionally, our confidence in our strategy, the momentum we see in the business and the strength of the brand portfolio has led us to raise our fiscal year 2019 guidance."

Second Quarter Fiscal 2019 Financial Review

  • Net sales increased 4.0% to $501.9 million compared to $482.5 million for the same period last year. On a constant currency basis, net sales increased 3.3%.
  • Gross margin was 50.2% compared to 46.7% for the same period last year.
  • SG&A expenses were $161.5 million compared to $157.8 million for the same period last year. Non-GAAP SG&A expenses were $161.2 million this year compared to $157.3 million last year.
  • Operating income was $90.4 million compared to $67.4 million for the same period last year. Non-GAAP operating income was $90.7 million this year compared to $67.8 million last year.
  • Diluted earnings per share was $2.48 compared to $1.54 for the same period last year. Non-GAAP diluted earnings per share was $2.38 this year compared to $1.54 last year.

Brand Summary

  • UGG® brand net sales for the second quarter decreased 1.0% to $396.3 million compared to $400.4 million for the same period last year.
  • HOKA ONE ONE® brand net sales for the second quarter increased 28.4% to $52.1 million compared to $40.6 million for the same period last year.
  • Teva® brand net sales for the second quarter increased 0.6% to $21.5 million compared to $21.4 million for the same period last year.
  • Sanuk® brand net sales for the second quarter decreased 9.4% to $13.8 million compared to $15.2 million for the same period last year.

 Channel Summary (included in the brand sales numbers above)

  • Wholesale net sales for the second quarter increased 4.3% to $408.0 million compared to $391.2 million for the same period last year.
  • DTC net sales for the second quarter increased 2.8% to $93.9 million compared to $91.3 million for the same period last year. DTC comparable sales for the second quarter increased 4.8% over the same period last year.

Geographic Summary (included in the brand and channel sales numbers above)

  • Domestic net sales for the second quarter increased 2.9% to $311.6 million compared to $302.7 million for the same period last year.
  • International net sales for the second quarter increased 5.9% to $190.3 million compared to $179.8 million for the same period last year.

Balance Sheet (September 30, 2018 as compared to September 30, 2017)

  • Cash and cash equivalents were $182.2 million compared to $230.6 million.
  • Inventories were $514.9 million compared to $555.6 million.
  • Outstanding borrowings were $102.7 million compared to $165.3 million.

Stock Repurchase Program

During the second quarter, the Company repurchased approximately 1.1 million shares of its common stock for a total of $125 million.  As of September 30, 2018, the Company had $116 million remaining under its $400 million in stock repurchase authorizations.

Full Year Fiscal 2019 Outlook for the Twelve Month Period Ending March 31, 2019

  • Net sales are now expected to be in the range of $1.935 billion to $1.960 billion.
  • Gross margin is now expected to be approximately 50%.
  • SG&A expenses as a percentage of sales are projected to be slightly better than 37%.
  • Operating margin is now expected to be in the range of 13.0% to 13.2%.
  • Effective tax rate is now expected to be approximately 21%.
  • Non-GAAP diluted earnings per share are now expected to be in the range of $6.65 to $6.85.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring charges. It also does not assume any impact from additional share repurchases.

Third Quarter Fiscal 2019 Outlook for the Three Month Period Ending December 31, 2018

  • Net sales are expected to be in the range of $805.0 million to $825.0 million.
  • Non-GAAP diluted earnings per share are expected to be in the range of $5.10 to $5.25.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring charges. It also does not assume any impact from additional share repurchases.

Non-GAAP Financial Measures

We present certain Non-GAAP financial measures in this press release, including constant currency, Non-GAAP SG&A expenses, Non-GAAP operating income and Non-GAAP diluted earnings (loss) per share, to provide information that may assist investors in understanding our financial results and assessing our prospects for future performance.  We believe these Non-GAAP financial measures are important indicators of our operating performance because they exclude items that are unrelated to, and may not be indicative of, our core operating results, such as charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring charges.  In particular, we believe the exclusion of certain costs and charges allows for a more meaningful comparison of our results from period to period.  These Non-GAAP measures, as we calculate them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers.  For example, in order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements in the condensed consolidated balance sheets.  These Non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.  To the extent we utilize such Non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period.  A reconciliation of each of the Non-GAAP financial measures to the most directly comparable GAAP measures has been provided under the heading "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" in the financial statement tables attached to this press release.

Conference Call Information

The Company's conference call to review the results for the second quarter fiscal 2019 will be broadcast live today, Thursday, October 25, 2018 at 4:30 pm Eastern Time and hosted at www.deckers.com.  You can access the broadcast by clicking on the "Investor" tab and then clicking on the microphone icon at the top of the page.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®.  Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has over 40 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally.  For more information, please visit www.deckers.com.    

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties.  Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our anticipated financial performance, including our projected net sales, margins, expenses, effective tax rate and earnings (loss) per share, as well as statements regarding our progress towards the achievement of our long term strategic objectives, our ability to compete in our industry, our product and brand positioning and strategies, and our potential repurchase of shares. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expected," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions.

Forward-looking statements represent our management's current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements.  Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as well as in our other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30,


Six Months Ended September 30,


2018


2017


2018


2017

Net sales

$

501,913



$

482,460



$

752,507



$

692,177


Cost of sales

250,026



257,343



385,655



376,435


Gross profit

251,887



225,117



366,852



315,742


Selling, general and administrative expenses

161,475



157,762



315,854



304,643


Income from operations

90,412



67,355



50,998



11,099










Other expense, net

637



1,034



274



1,365


Income before income taxes

89,775



66,321



50,724



9,734


Income tax expense

15,403



16,762



6,759



2,296


Net income

74,372



49,559



43,965



7,438


Other comprehensive (loss) income, net of tax








Unrealized (loss) gain on foreign currency exchange rate hedges

(1,197)



(911)



4,126



(4,683)


Foreign currency translation (loss) gain

(3,861)



2,968



(11,324)



4,518


Total other comprehensive (loss) income

(5,058)



2,057



(7,198)



(165)


Comprehensive income

$

69,314



$

51,616



$

36,767



$

7,273










Net income per share








Basic

$

2.49



$

1.55



$

1.46



$

0.23


Diluted

$

2.48



$

1.54



$

1.45



$

0.23


Weighted-average common shares outstanding








Basic

29,849



32,015



30,134



32,003


Diluted

30,028



32,272



30,327



32,256


 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)






September 30, 2018


March 31, 2018

ASSETS

(UNAUDITED)



Current assets




Cash and cash equivalents

$

182,192



$

429,970


Trade accounts receivable, net

321,784



143,704


Inventories, net

514,927



299,602


Other current assets

59,562



37,414


Total current assets

1,078,465



910,690






Property and equipment, net

215,720



220,162


Other noncurrent assets

129,783



133,527


Total assets

$

1,423,968



$

1,264,379


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Short-term borrowings

$

71,473



$

578


Trade accounts payable

277,577



93,939


Other current liabilities

99,167



94,649


Total current liabilities

448,217



189,166






Mortgage payable

31,210



31,504


Other long-term liabilities

97,754



102,930


Total long-term liabilities

128,964



134,434






Total stockholders' equity

846,787



940,779


Total liabilities and stockholders' equity

$

1,423,968



$

1,264,379


 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30, 2018






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items)
(2) (3)

Net sales

$

501,913





$

501,913


Cost of sales

250,026





250,026


Gross profit

251,887





251,887


Selling, general and administrative expenses

161,475



(295)


161,180


Income from operations

90,412



295


90,707








Other expense (income), net

637



(445)


192


Income before income taxes

89,775



740


90,515


Income tax expense

15,403





19,008


Net income

$

74,372





$

71,507








Net income per share






Basic

$

2.49





$

2.40


Diluted

$

2.48





$

2.38


Weighted-average common shares outstanding






Basic

29,849





29,849


Diluted

30,028





30,028




(1)

 Amounts as of September 30, 2018 reflect charges related to restructuring costs, other charges related to organizational changes and charges in connection with the Company's refinancing of its prior credit facility.

(2)

The effective tax rate for the GAAP measures is 17.2% and the tax rate applied to the Non-GAAP measures is 21% for the three months ended September 30, 2018, which represents our expected effective tax rate for fiscal year 2019.

(3)

Figures may not sum due to rounding.

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30, 2017






Non-GAAP


GAAP Measures




Measures


(As Reported)


Other Charges (1)


(Excluding Items) (2)

Net sales

$

482,460





$

482,460


Cost of sales

257,343





257,343


Gross profit

225,117





225,117


Selling, general and administrative expenses

157,762



(464)


157,298


Income from operations

67,355



464


67,819








Other expense, net

1,034




1,034


Income before income taxes

66,321



464


66,785


Income tax expense

16,762





17,084


Net income

$

49,559





$

49,701








Net income per share






Basic

$

1.55





$

1.55


Diluted

$

1.54





$

1.54


Weighted-average common shares outstanding






Basic

32,015





32,015


Diluted

32,272





32,272




(1)

Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.

(2)

The tax rate applied to the Non-GAAP measures is 25.6% for the three months ended September 30, 2017.

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Six Months Ended September 30, 2018






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items)

(2) (3)

Net sales

$

752,507





$

752,507


Cost of sales

385,655





385,655


Gross profit

366,852





366,852


Selling, general and administrative expenses

315,854



(818)


315,037


Income from operations

50,998



818


51,816








Other expense (income), net

274



(445)


(171)


Income before income taxes

50,724



1,263


51,986


Income tax expense

6,759





10,345


Net income

$

43,965





$

41,641








Net income per share






Basic

$

1.46





$

1.38


Diluted

$

1.45





$

1.37


Weighted-average common shares outstanding






Basic

30,134





30,134


Diluted

30,327





30,327




(1)

Amounts as of September 30, 2018 reflect charges related to restructuring costs, other charges related to organizational changes and charges in connection with the Company's refinancing of its prior credit facility.

(2)

The effective tax rate for the GAAP measures is 13.3% and the tax rate applied to the Non-GAAP measures is 19.9% for the six months ended September 30, 2018. The 19.9% Non-GAAP tax rate is calculated using the blended Non-GAAP tax rates for the three months ended June 30, 2018 and September 30, 2018, respectively.

(3)

Figures may not sum due to rounding.

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Six Months Ended September 30, 2017






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items) (2)

Net sales

$

692,177





$

692,177


Cost of sales

376,435





376,435


Gross profit

315,742





315,742


Selling, general and administrative expenses

304,643



(2,408)


302,235


Income from operations

11,099



2,408


13,507








Other expense, net

1,365




1,365


Income before income taxes

9,734



2,408


12,142


Income tax expense

2,296





3,357


Net income

$

7,438





$

8,785








Net income per share






Basic

$

0.23





$

0.27


Diluted

$

0.23





$

0.27


Weighted-average common shares outstanding






Basic

32,003





32,003


Diluted

32,256





32,256




(1)

Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.

(2)

The tax rate applied to the Non-GAAP measures is 27.6% for the six months ended September 30, 2017.

 

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SOURCE Deckers Brands