-
Net Sales
$591 Million , Up 7% -
EPS
$0.69 , Up 28%; Adjusted EPS$0.79 , Up 41%
“We exceeded our sales and earnings goals, and made good progress with
our growth initiatives in the first quarter," said
Consolidated net sales increased
Operating income in the first quarter of fiscal 2013 was
Net income in the first quarter of fiscal 2013 increased
A reconciliation of income as reported under accounting principles
generally accepted in
Cash flow from operations in the first quarter of fiscal 2013 was
Business Segment Results
Carter’s Segments
Carter’s retail segment sales increased
Carter’s wholesale segment sales decreased
OshKosh B’gosh Segments
OshKosh retail segment sales decreased
OshKosh wholesale segment sales decreased
International Segment
As previously announced, the Company completed a transaction with a
former licensee in
International segment sales increased
Stock Repurchase Program
During the first quarter of fiscal 2013, the Company repurchased 156,600
shares of its common stock for
All repurchases were executed pursuant to a trading plan that meets the safe harbor requirements of Rule 10b5-1 of the Securities Act of 1933.
2013 Business Outlook
For the second quarter of fiscal 2013, the Company expects net sales
will increase approximately 10% compared to net sales of
For fiscal 2013, the Company continues to expect net sales will increase
approximately 8% to 10% compared to net sales of
Conference Call
The Company will hold a conference call with investors to discuss first
quarter fiscal 2013 results and its business outlook on
About
Cautionary Language
This press release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 relating to the Company's future
performance, including, without limitation, statements with respect to
the Company's anticipated financial results for the second quarter of
fiscal 2013 and fiscal year 2013, or any other future period, assessment
of the Company's performance and financial position, and drivers of the
Company's sales and earnings growth. Such statements are based on
current expectations only, and are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated, or projected. Factors that could cause actual results to
materially differ include the risks of: losing one or more major
customers; the Company's products not being accepted in the marketplace;
changes in consumer preference and fashion trends; negative publicity;
the Company failing to protect its intellectual property; the breach of
the Company's consumer databases; increased production costs;
deflationary pricing pressures; decreases in the overall level of
consumer spending; disruptions resulting from the Company's dependence
on foreign supply sources; the Company's foreign supply sources not
meeting the Company's quality standards or regulatory requirements;
disruption to the Company's eCommerce business or distribution
facilities due to the planned transition or otherwise; disruptions in
the Company's supply chain or in-sourcing capabilities resulting from
sourcing through a single port or otherwise; the loss of the Company's
principal product sourcing agent; increased competition in the baby and
young children's apparel market; the Company being unable to identify
new retail store locations or negotiate appropriate lease terms for the
retail stores; the Company not adequately forecasting demand, which
could, among other things, create significant levels of excess
inventory; failure to achieve sales growth plans, cost savings, and
other assumptions that support the carrying value of the Company's
intangible assets; not attracting and retaining key individuals within
the organization; failure to implement needed upgrades to the Company's
information technology systems; disruptions resulting from the Company's
transition of distribution functions to its new
|
CARTER’S, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except for share data) (unaudited) |
||||||||
|
For the fiscal
quarters ended |
||||||||
|
March 30, 2013 |
March 31, 2012 |
|||||||
| Net sales | $ | 591,009 | $ | 551,662 | ||||
| Cost of goods sold | 347,947 | 356,923 | ||||||
| Gross profit | 243,062 | 194,739 | ||||||
| Selling, general, and administrative expenses | 185,361 | 149,705 | ||||||
| Royalty income | (9,242 | ) | (8,766 | ) | ||||
| Operating income | 66,943 | 53,800 | ||||||
| Interest expense, net | 1,216 | 1,957 | ||||||
| Other expense (income), net | 460 | 306 | ||||||
| Income before income taxes | 65,267 | 51,537 | ||||||
| Provision for income taxes | 23,852 | 19,262 | ||||||
| Net income | $ | 41,415 | $ | 32,275 | ||||
| Basic net income per common share | $ | 0.70 | $ | 0.55 | ||||
| Diluted net income per common share | $ | 0.69 | $ | 0.54 | ||||
|
CARTER’S, INC. BUSINESS SEGMENT RESULTS (dollars in thousands) (unaudited) |
||||||||||||||
| For the fiscal quarters ended | ||||||||||||||
|
March 30, 2013 |
% of Total |
March 31, 2012 |
% of Total |
|||||||||||
|
Net sales: |
||||||||||||||
| Carter’s Wholesale | $ | 248,178 | 42.0 | % | $ | 249,485 | 45.2 | % | ||||||
| Carter’s Retail (a) | 208,429 | 35.3 | % | 177,204 | 32.1 | % | ||||||||
| Total Carter’s | 456,607 | 77.3 | % | 426,689 | 77.3 | % | ||||||||
| OshKosh Retail (a) | 55,345 | 9.4 | % | 57,988 | 10.5 | % | ||||||||
| OshKosh Wholesale | 18,186 | 3.1 | % | 20,274 | 3.7 | % | ||||||||
| Total OshKosh | 73,531 | 12.4 | % | 78,262 | 14.2 | % | ||||||||
| International (b) | 60,871 | 10.3 | % | 46,711 | 8.5 | % | ||||||||
| Total net sales | $ | 591,009 | 100.0 | % | $ | 551,662 | 100.0 | % | ||||||
|
Operating income (loss): |
% of segment net sales |
% of segment net sales |
||||||||||||
| Carter’s Wholesale | $ | 50,184 | 20.2 | % | $ | 40,216 | 16.1 | % | ||||||
| Carter’s Retail (a) | 39,784 | 19.1 | % | 30,534 | 17.2 | % | ||||||||
| Total Carter’s | 89,968 | 19.7 | % | 70,750 | 16.6 | % | ||||||||
| OshKosh Retail (a) | (5,095 | ) | (9.2 | )% | (7,339 | ) | (12.7 | )% | ||||||
| OshKosh Wholesale | 2,803 | 15.4 | % | 619 | 3.1 | % | ||||||||
| Total OshKosh | (2,292 | ) | (3.1 | )% | (6,720 | ) | (8.6 | )% | ||||||
| International (b) (c) | 4,996 | 8.2 | % | 6,903 | 14.8 | % | ||||||||
| Total segment operating income | 92,672 | 15.7 | % | 70,933 | 12.9 | % | ||||||||
| Corporate expenses (d) (e) | (25,729 | ) | (4.4 | )% | (17,133 | ) | (3.1 | )% | ||||||
| Total operating income | $ | 66,943 | 11.3 | % | $ | 53,800 | 9.8 | % | ||||||
| (a) | Includes eCommerce results. | |
| (b) |
Net sales includes international retail, eCommerce, and wholesale sales. Operating income includes international licensing income. |
|
| (c) |
Includes charges of $0.9 million and $0.7 million for the first fiscal quarters of 2013 and 2012, respectively, associated with the revaluation of the Company’s contingent consideration. |
|
| (d) |
Corporate expenses generally include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees. |
|
| (e) |
Includes $0.6 million and $1.1 million in facility closure-related costs associated with the closure of a distribution facility located in Hogansville, GA, for the first fiscal quarters of 2013 and 2012, respectively, and $8.0 million related to the office consolidation, for the first fiscal quarter of 2013. |
|
|
Certain prior year amounts have been reclassified for comparative purposes. |
||
|
CARTER’S, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except for share data) (unaudited) |
||||||||||||
|
March 30, 2013 |
December 29, 2012 |
March 31, 2012 |
||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 397,563 | $ | 382,236 | $ | 300,535 | ||||||
| Accounts receivable, net | 178,360 | 168,046 | 178,668 | |||||||||
| Finished goods inventories, net | 284,525 | 349,530 | 265,691 | |||||||||
| Prepaid expenses and other current assets | 21,612 | 22,216 | 16,425 | |||||||||
| Deferred income taxes | 31,708 | 35,675 | 24,114 | |||||||||
| Total current assets | 913,768 | 957,703 | 785,433 | |||||||||
| Property, plant, and equipment, net | 182,193 | 170,110 | 127,736 | |||||||||
| Goodwill | 188,731 | 189,749 | 189,696 | |||||||||
| Tradenames and other intangibles, net | 305,974 | 306,072 | 306,353 | |||||||||
| Deferred debt issuance costs, net | 2,682 | 2,878 | 2,447 | |||||||||
| Other assets | 4,333 | 3,597 | 399 | |||||||||
| Total assets | $ | 1,597,681 | $ | 1,630,109 | $ | 1,412,064 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Current maturities of long-term debt | $ | — | $ | — | $ | — | ||||||
| Accounts payable | 97,884 | 149,625 | 67,610 | |||||||||
| Other current liabilities | 72,590 | 94,610 | 51,484 | |||||||||
| Total current liabilities | 170,474 | 244,235 | 119,094 | |||||||||
| Long-term debt | 186,000 | 186,000 | 236,000 | |||||||||
| Deferred income taxes | 112,015 | 114,341 | 113,773 | |||||||||
| Other long-term liabilities | 106,004 | 100,054 | 100,555 | |||||||||
| Total liabilities | 574,493 | 644,630 | 569,422 | |||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at March 30, 2013, December 29, 2012, and March 31, 2012, respectively | — | — | — | |||||||||
| Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 59,358,011, 59,126,639, and 58,938,891 shares issued and outstanding at March 30, 2013, December 29, 2012, and March 31, 2012, respectively | 594 | 591 | 589 | |||||||||
| Additional paid-in capital | 248,032 | 250,276 | 235,198 | |||||||||
| Accumulated other comprehensive loss | (12,670 | ) | (11,205 | ) | (10,087 | ) | ||||||
| Retained earnings | 787,232 | 745,817 | 616,942 | |||||||||
| Total stockholders’ equity | 1,023,188 | 985,479 | 842,642 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,597,681 | $ | 1,630,109 | $ | 1,412,064 | ||||||
|
CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (dollars in thousands) (unaudited) |
||||||||
| For the fiscal quarters ended | ||||||||
|
March 30, 2013 |
March 31, 2012 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 41,415 | $ | 32,275 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 12,389 | 8,589 | ||||||
| Non-cash revaluation of contingent consideration | 891 | 692 | ||||||
| Amortization of debt issuance costs | 196 | 177 | ||||||
| Non-cash stock-based compensation expense | 4,065 | 2,868 | ||||||
| Income tax benefit from stock-based compensation | (3,531 | ) | (1,535 | ) | ||||
| Loss on disposal of property, plant, and equipment | 88 | 391 | ||||||
| Deferred income taxes | 1,837 | 201 | ||||||
| Effect of changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (10,402 | ) | (20,807 | ) | ||||
| Inventories | 64,592 | 82,000 | ||||||
| Prepaid expenses and other assets | (221 | ) | 2,215 | |||||
| Accounts payable and other liabilities | (58,191 | ) | (24,624 | ) | ||||
| Net cash provided by operating activities | 53,128 | 82,442 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (31,426 | ) | (16,381 | ) | ||||
| Proceeds from sale of property, plant, and equipment | — | 6 | ||||||
| Net cash used in investing activities | (31,426 | ) | (16,375 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under revolving credit facility | — | 2,500 | ||||||
| Payments on revolving credit facility | — | (2,500 | ) | |||||
| Repurchase of common stock | (8,942 | ) | — | |||||
| Income tax benefit from stock-based compensation | 3,531 | 1,535 | ||||||
| Withholdings from vesting of restricted stock | (4,383 | ) | (2,247 | ) | ||||
| Proceeds from exercise of stock options | 3,760 | 1,682 | ||||||
| Net cash (used in) provided by financing activities | (6,034 | ) | 970 | |||||
| Effect of exchange rate changes on cash | (341 | ) | 4 | |||||
| Net increase in cash and cash equivalents | 15,327 | 67,041 | ||||||
| Cash and cash equivalents, beginning of period | 382,236 | 233,494 | ||||||
| Cash and cash equivalents, end of period | $ | 397,563 | $ | 300,535 | ||||
|
CARTER’S, INC. RECONCILIATION OF GAAP TO ADJUSTED RESULTS (dollars in millions, except earnings per share) |
|||||||||||||||
| Quarter ended March 30, 2013 | |||||||||||||||
| SG&A | Operating Income | Net Income | Diluted EPS | ||||||||||||
| As reported (GAAP) | $ | 185.4 | $ | 66.9 | $ | 41.4 | $ | 0.69 | |||||||
|
Office consolidation costs (a) |
(8.0 | ) | 8.0 | 5.1 | 0.09 | ||||||||||
| Revaluation of contingent consideration (b) | (0.9 | ) | 0.9 | 0.9 | 0.02 | ||||||||||
| Facility closure costs - Hogansville DC (c) | (0.6 | ) | 0.6 | 0.4 | 0.01 | ||||||||||
| As adjusted (d) | $ | 175.9 | $ | 76.4 | $ | 47.7 | $ | 0.79 | |||||||
| Quarter ended March 31, 2012 | ||||||||||||||
| SG&A | Operating Income | Net Income | Diluted EPS | |||||||||||
| As reported (GAAP) | $ | 149.7 | $ | 53.8 | $ | 32.3 | $ | 0.54 | ||||||
| Revaluation of contingent consideration (b) | (0.7 | ) | 0.7 | 0.7 | 0.01 | |||||||||
| Facility closure costs - Hogansville DC (c) | (1.1 | ) | 1.1 | 0.7 | 0.01 | |||||||||
| As adjusted (d) | $ | 147.9 | $ | 55.6 | $ | 33.7 | $ | 0.56 | ||||||
| (a) |
Costs related to the office consolidation. |
|
| (b) | Revaluation of the contingent consideration liability associated with the Company's acquisition of Bonnie Togs. | |
| (c) |
Costs related to the closure of a distribution facility located in Hogansville, GA, announced in the first quarter of fiscal 2012. |
|
| (d) |
In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations. |
|
|
Note: Results may not be additive due to rounding. Certain prior year amounts have been reclassified for comparative purposes. |
||
|
|
|
CARTER’S, INC. RECONCILIATION OF GAAP TO ADJUSTED RESULTS (dollars in millions, except earnings per share) |
|||||||||||||||
| Quarter ended June 30, 2012 | |||||||||||||||
| SG&A | Operating Income | Net Income | Diluted EPS | ||||||||||||
| As reported (GAAP) | $ | 156.3 | $ | 34.4 | $ | 20.8 | $ | 0.35 | |||||||
| Revaluation of contingent consideration (a) | (1.1 | ) | 1.1 | 1.1 | 0.01 | ||||||||||
| Facility closure costs - Hogansville DC (b) | (0.7 | ) | 0.7 | 0.5 | 0.01 | ||||||||||
| As adjusted (d) | $ | 154.5 | $ | 36.2 | $ | 22.4 | $ | 0.37 | |||||||
| Fiscal year ended December 29, 2012 | ||||||||||||||
| SG&A | Operating Income | Net Income | Diluted EPS | |||||||||||
| As reported (GAAP) | $ | 713.2 | $ | 262.0 | $ | 161.2 | $ | 2.69 | ||||||
|
Office consolidation costs (c) |
(6.4 | ) | 6.4 | 4.0 | 0.07 | |||||||||
| Revaluation of contingent consideration (a) | (3.6 | ) | 3.6 | 3.6 | 0.06 | |||||||||
| Facility closure costs - Hogansville DC (b) | (3.1 | ) | 3.1 | 1.9 | 0.03 | |||||||||
| As adjusted (d) | $ | 700.1 | $ | 275.1 | $ | 170.7 | $ | 2.85 | ||||||
| (a) | Revaluation of the contingent consideration liability associated with the Company's acquisition of Bonnie Togs. | |
| (b) |
Costs related to the closure of a distribution facility located in Hogansville, GA, announced in the first quarter of fiscal 2012. |
|
| (c) |
Costs related to the office consolidation. |
|
| (d) |
In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations. |
|
|
Note: Results may not be additive due to rounding. Certain prior year amounts have been reclassified for comparative purposes. |
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|
|
|
CARTER’S, INC. RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS |
||||||||
|
For the
quarters ended |
||||||||
|
March 30, 2013 |
March 31, 2012 |
|||||||
| Weighted-average number of common and common equivalent shares outstanding: | ||||||||
| Basic number of common shares outstanding | 58,467,804 | 58,057,275 | ||||||
| Dilutive effect of unvested restricted stock | 181,030 | 178,708 | ||||||
| Dilutive effect of stock options | 696,374 | 604,735 | ||||||
| Diluted number of common and common equivalent shares outstanding | 59,345,208 | 58,840,718 | ||||||
|
As reported on a GAAP Basis: |
||||||||
| Basic net income per common share: | ||||||||
| Net income | $ | 41,415,000 | $ | 32,275,000 | ||||
| Income allocated to participating securities | (602,390 | ) | (442,525 | ) | ||||
| Net income available to common shareholders | $ | 40,812,610 | $ | 31,832,475 | ||||
| Basic net income per common share | $ | 0.70 | $ | 0.55 | ||||
| Diluted net income per common share: | ||||||||
| Net income | $ | 41,415,000 | $ | 32,275,000 | ||||
| Income allocated to participating securities | (595,402 | ) | (438,025 | ) | ||||
| Net income available to common shareholders | $ | 40,819,598 | $ | 31,836,975 | ||||
| Diluted net income per common share | $ | 0.69 | $ | 0.54 | ||||
|
As adjusted (a): |
||||||||
| Basic net income per common share: | ||||||||
| Net income | $ | 47,709,000 | $ | 33,668,000 | ||||
| Income allocated to participating securities | (693,938 | ) | (461,625 | ) | ||||
| Net income available to common shareholders | $ | 47,015,062 | $ | 33,206,375 | ||||
| Basic net income per common share | $ | 0.80 | $ | 0.57 | ||||
| Diluted net income per common share: | ||||||||
| Net income | $ | 47,709,000 | $ | 33,668,000 | ||||
| Income allocated to participating securities | (685,887 | ) | (456,930 | ) | ||||
| Net income available to common shareholders | $ | 47,023,113 | $ | 33,211,070 | ||||
| Diluted net income per common share | $ | 0.79 | $ | 0.56 | ||||
| (a) |
In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present per share data excluding the adjustments discussed above. The Company has excluded $6.3 million and $1.4 million in after-tax expenses from these results for first fiscal quarters of 2013 and 2012, respectively. |
Source: Carter’s, Inc.
Carter’s, Inc.
Sean McHugh, 404-745-2889
Vice President,
Investor
Relations & Treasury