MOVADO GROUP, INC.
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(Exact name of registrant as specified in its charter)
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New York
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(State or other jurisdiction of incorporation)
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1-16497
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13-2595932
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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650 From Road, Suite 375
Paramus, NJ
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07652-3556
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(Address of principal executive offices)
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(Zip Code)
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(201) 267-8000
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(Registrant’s Telephone Number, Including Area Code)
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Exhibit No.
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Description
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MOVADO GROUP, INC.
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By:
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/s/ Timothy F. Michno | |
Timothy F. Michno | |||
General Counsel
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CONTACT:
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ICR, Inc.
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Rachel Schacter/Allison Malkin
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203-682-8200
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Net sales increased 18.4% to $189.7 million compared to $160.2 million in the third quarter of fiscal 2013 led by growth in the accessible luxury and licensed brand categories.
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Gross profit was $101.3 million, or 53.4% of sales, compared to $90.4 million, or 56.4% of sales, in
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the third quarter last year. The decrease in gross margin percentage was primarily the result of a shift in channel and product mix and the unfavorable impact of fluctuations in foreign currency exchange rates partially offset by the leverage gained on certain fixed costs.
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Operating expenses increased $1.8 million, or 2.7%, to $67.2 million compared to $65.4 million in the third quarter last year. Adjusted operating expenses for third quarter fiscal 2013, which exclude the $3.0 million charitable contribution to the Movado Group Foundation, were $62.4 million. The increase in operating expenses was primarily the result of higher marketing expense and other operating expenses, partially offset by lower compensation expense primarily related to the accrual for performance-based compensation.
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Operating income increased to $34.1 million compared to operating income of $25.0 million in the same period last year. For third quarter fiscal 2013, adjusted operating income was $28.0 million, excluding the aforementioned charitable contribution. (See attached table for GAAP and Non-GAAP measures.)
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The Company recorded a tax provision of $10.6 million in the third quarter of fiscal 2014 as compared to a tax benefit of $9.9 million in the prior year. Last year’s tax benefit of $9.9 million was impacted by the release of a $19.4 million domestic valuation allowance as well as the aforementioned charitable contribution. The effective tax rate in third quarter of fiscal 2014 was 31.1% compared to an adjusted effective tax rate of 37.1% in the third quarter of fiscal 2013. (See attached table for GAAP and Non-GAAP measures.)
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Net income was $23.0 million, or $0.89 per diluted share, compared to net income of $34.5 million, or $1.34 per diluted share, in the third quarter of fiscal 2013. Adjusted net income in the third quarter fiscal 2013 was $17.2 million, or $0.67 per diluted share, excluding the tax benefit and charitable contribution. (See attached table for GAAP and Non-GAAP measures.)
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EBITDA increased to $37.0 million compared to EBITDA of $27.3 million in the third quarter of fiscal 2013. Adjusted EBITDA was $30.3 million in the third quarter of fiscal 2013. (See attached table for GAAP and Non-GAAP measures.)
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Net sales increased 14.7% to $438.0 million compared to $381.9 million in the same period of fiscal 2013 led by growth in every brand category.
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Gross profit was $236.0 million, or 53.9% of sales, compared to $215.2 million, or 56.4% of sales in the same period last year. The decrease in gross margin percentage was primarily the result of a shift in channel and product mix, partially offset by the leverage gained on certain fixed costs.
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Operating expenses increased $3.9 million, or 2.3%, to $174.9 million versus $171.0 million in the same period last year. Adjusted operating expenses for the nine month period of fiscal 2013 were $168.0 million. The $6.9 million increase in adjusted operating expenses was primarily the result of higher marketing expenses and other operating expenses, partially offset by lower compensation expense primarily related to the accrual for performance-based compensation.
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Operating income increased to $61.1 million compared to operating income of $44.2 million in the same period last year. Adjusted operating income for the nine month period of fiscal 2013 was $47.2
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million. (See attached table GAAP and Non-GAAP measures.)
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The Company recorded a tax provision of $18.2 million for the nine month period of fiscal 2014 as compared to a tax benefit of $5.7 million for the nine month period of fiscal 2013. Last year’s tax benefit was impacted by the release of a $19.4 million domestic valuation allowance as well as the aforementioned charitable contribution. The effective tax rate in the fiscal 2014 period was 29.1% compared to an adjusted effective tax rate of 30.9% in the fiscal 2013 period. (See attached table for GAAP and Non-GAAP measures.)
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Net income was $43.7 million, or $1.69 per diluted share, compared to net income for the nine month period of fiscal 2013 of $49.2 million, or $1.92 per diluted share. Adjusted net income in the nine month period for 2013 was $31.9 million, or $1.25 per diluted share. (See attached table for GAAP and Non-GAAP measures.)
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EBITDA was $69.8 million compared to EBITDA of $52.3 million in the same period of fiscal 2013. Adjusted EBITDA for the nine month period fiscal 2013 was $55.3 million. (See attached table for GAAP and Non-GAAP measures.)
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Updated Fiscal 2014
Guidance
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Prior Guidance |
Fiscal 2013
Actual Results
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Net Sales | $580 million | $575 - $580 million | $510.4 million | ||
Operating Income | $72 million | $70 million | $57.2 million | ||
EBITDA | $84 million | $81.5 million | $67.9 million | ||
Effective Tax Rate | 30% | 28% | 24.6% | ||
Net Income | $49 million | $49 million | $42.1 million | ||
Diluted EPS | $1.90 | $1.90 | $1.64 |
Three Months Ended
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Nine Months Ended
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October 31,
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October 31,
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2013
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2012
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2013
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2012
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Net sales
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$ | 189,685 | $ | 160,202 | $ | 437,996 | $ | 381,884 | ||||||||
Cost of sales
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88,415 | 69,783 | 201,989 | 166,682 | ||||||||||||
Gross profit
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101,270 | 90,419 | 236,007 | 215,202 | ||||||||||||
Selling, general and administrative
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67,186 | 65,429 | 174,878 | 170,975 | ||||||||||||
Operating income
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34,084 | 24,990 | 61,129 | 44,227 | ||||||||||||
Other income
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- | - | 1,526 | - | ||||||||||||
Interest expense
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(114 | ) | (69 | ) | (294 | ) | (287 | ) | ||||||||
Interest income
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14 | 66 | 53 | 84 | ||||||||||||
Income before income taxes
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33,984 | 24,987 | 62,414 | 44,024 | ||||||||||||
Provision for / (benefit from) income taxes
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11,020 | (9,866 | ) | 18,616 | (5,744 | ) | ||||||||||
Net income
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22,964 | 34,853 | 43,798 | 49,768 | ||||||||||||
Less: Net income attributed to noncontrolling interests
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395 | 380 | 564 | 604 | ||||||||||||
Net income attributed to Movado Group, Inc.
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$ | 22,569 | $ | 34,473 | $ | 43,234 | $ | 49,164 | ||||||||
Per Share Information:
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Net income attributed to Movado Group, Inc.
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$ | 0.87 | $ | 1.34 | $ | 1.67 | $ | 1.92 | ||||||||
Weighted diluted average shares outstanding
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25,842 | 25,710 | 25,855 | 25,598 |
Three Months Ended
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Nine Months Ended
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October 31,
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October 31,
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2013
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2012
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2013
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2012
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Operating income (GAAP)
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$ | 34,084 | $ | 24,990 | $ | 61,129 | $ | 44,227 | ||||||||
Charitable contribution (1)
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- | 3,000 | - | 3,000 | ||||||||||||
Adjusted operating income (non-GAAP)
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34,084 | 27,990 | 61,129 | 47,227 | ||||||||||||
Depreciation and amortization
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2,924 | 2,344 | 8,693 | 8,036 | ||||||||||||
Adjusted EBITDA (non-GAAP)
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$ | 37,008 | $ | 30,334 | $ | 69,822 | $ | 55,263 |
Three Months Ended
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Nine Months Ended
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October 31,
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October 31,
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2013
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2012
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2013
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2012
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Income attributed to Movado Group, Inc. (GAAP)
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$ | 22,569 | $ | 34,473 | $ | 43,234 | $ | 49,164 | ||||||||
Charitable contribution (1)
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- | 2,151 | - | 2,151 | ||||||||||||
Valuation allowance (2)
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- | (19,409 | ) | - | $ | (19,409 | ) | |||||||||
Adjusted income attributed to Movado Group, Inc. (non-GAAP)
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$ | 22,569 | $ | 17,215 | $ | 43,234 | $ | 31,906 | ||||||||
Adjusted effective tax rate (non-GAAP)
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32.4 | % | 37.1 | % | 29.8 | % | 30.9 | % | ||||||||
Adjusted income per share (non-GAAP)
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$ | 0.87 | $ | 0.67 | $ | 1.67 | $ | 1.25 | ||||||||
Weighted diluted average shares outstanding
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25,842 | 25,710 | 25,855 | 25,598 |
(1)
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Reflects a contribution to the Movado Group Foundation.
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(2)
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Actual taxes in prior period primarily reflect the reversal of the valuation allowance on certain of the Company's U.S. net deferred tax assets.
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October 31,
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January 31,
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October 31,
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2013
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2013
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2012
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ASSETS
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Cash and cash equivalents
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$ | 163,146 | $ | 167,889 | $ | 164,813 | ||||||
Trade receivables
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123,215 | 64,300 | 107,138 | |||||||||
Inventories
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175,542 | 164,354 | 169,668 | |||||||||
Other current assets
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35,429 | 37,556 | 34,339 | |||||||||
Total current assets
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497,332 | 434,099 | 475,958 | |||||||||
Property, plant and equipment, net
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46,512 | 44,501 | 35,541 | |||||||||
Deferred income taxes
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21,881 | 22,749 | 26,863 | |||||||||
Other non-current assets
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29,266 | 25,013 | 24,009 | |||||||||
Total assets
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$ | 594,991 | $ | 526,362 | $ | 562,371 | ||||||
LIABILITIES AND EQUITY
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Accounts payable
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$ | 36,620 | $ | 22,075 | $ | 29,770 | ||||||
Accrued liabilities
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51,172 | 51,136 | 63,494 | |||||||||
Deferred and current income taxes payable
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15,722 | 275 | 12,842 | |||||||||
Total current liabilities
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103,514 | 73,486 | 106,106 | |||||||||
Deferred and non-current income taxes payable
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3,930 | 5,637 | 4,548 | |||||||||
Other non-current liabilities
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25,329 | 21,547 | 20,318 | |||||||||
Noncontrolling interests
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2,593 | 2,002 | 3,102 | |||||||||
Shareholders' equity
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459,625 | 423,690 | 428,297 | |||||||||
Total liabilities and equity
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$ | 594,991 | $ | 526,362 | $ | 562,371 |
Nine Months Ended | ||||||||
October 31, | ||||||||
2013
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2012
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Cash flows from operating activities:
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Net income
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$ | 43,798 | $ | 49,768 | ||||
Depreciation and amortization
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8,693 | 8,036 | ||||||
Other non-cash adjustments
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1,898 | (15,246 | ) | |||||
Changes in working capital
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(36,158 | ) | (36,332 | ) | ||||
Changes in non-current assets and liabilities
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(1,615 | ) | (436 | ) | ||||
Net cash provided by operating activities
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16,616 | 5,790 | ||||||
Cash flows from investing activities:
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Capital expenditures
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(11,895 | ) | (6,524 | ) | ||||
Proceeds from sale of an asset held for sale
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2,196 | - | ||||||
Trademarks
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(225 | ) | (251 | ) | ||||
Net cash (used in) investing activities
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(9,924 | ) | (6,775 | ) | ||||
Cash flows from financing activities:
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Dividends paid
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(4,604 | ) | (16,345 | ) | ||||
Stock repurchase
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(7,450 | ) | - | |||||
Other financing
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334 | 1,461 | ||||||
Net cash (used in) financing activities
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(11,720 | ) | (14,884 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
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285 | (1,519 | ) | |||||
Net change in cash and cash equivalents
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(4,743 | ) | (17,388 | ) | ||||
Cash and cash equivalents at beginning of period
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167,889 | 182,201 | ||||||
Cash and cash equivalents at end of period
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$ | 163,146 | $ | 164,813 |
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