Columbia Sportswear Company Reports Record Second Quarter and First Half 2019 Financial Results; Updates Full Year 2019 Financial Outlook

Second Quarter 2019 Highlights

  • Net sales increased 9 percent (11 percent constant-currency) compared to second quarter 2018, to a record $526.2 million.
  • Gross margin expanded 70 basis points to a record 48.2 percent of net sales, compared to second quarter 2018 gross margin of 47.5 percent of net sales.
  • Operating income increased 68 percent to a record $16.4 million and operating margin expanded 110 basis points to 3.1 percent of net sales, compared to second quarter 2018 operating income of $9.7 million, or 2.0 percent of net sales. Compared to non-GAAP second quarter 2018 operating income of $11.6 million, or 2.4 percent of net sales, operating income increased 41 percent and operating margin expanded 70 basis points.
  • Earnings per diluted share increased 143 percent to a record $0.34, compared to second quarter 2018 earnings per diluted share of $0.14. Compared to non-GAAP second quarter 2018 earnings per diluted share of $0.16, earnings per diluted share increased 113 percent. Diluted earnings per share includes $0.11 of one-time tax benefits primarily related to the passage of a Swiss tax reform package.

Full Year 2019 Financial Outlook

(Financial outlook details can be found in the "Supplemental Financial Information" section and CFO Commentary document).

  • Net sales of $3.00 to $3.04 billion (prior $2.98 to $3.04 billion), representing net sales growth of 7.0 to 8.5 percent (prior 6.5 to 8.5 percent). The net sales outlook includes a foreign currency translation impact that is anticipated to reduce net sales growth by approximately 90 basis points.
  • Operating income of $388 to $396 million (prior $378 to $391 million), representing operating margin of 12.9 to 13.0 percent (prior 12.7 to 12.9 percent).
  • Diluted earnings per share of $4.65 to $4.75 (prior $4.40 to $4.55).

Throughout this press release, amounts stated to be non-GAAP exclude items described in the "Non-GAAP Financial Measures" section below. Additionally, constant-currency net sales, a non-GAAP financial measure, is referenced throughout this press release. Please see the "Supplemental Financial Information" section and financial tables included below for a more detailed description of this and other non-GAAP financial measures.

PORTLAND, Ore.--()--Columbia Sportswear Company (NASDAQ: COLM), a leading innovator in active outdoor apparel, footwear, accessories and equipment, today announced second quarter 2019 financial results for the period ended June 30, 2019.

President and Chief Executive Officer Tim Boyle commented, "2019 is shaping up to be another great year for Columbia Sportswear Company. Momentum across our diverse brand portfolio, distribution channels and regions along with Project CONNECT financial benefits fueled record second quarter and first half financial performance. The Columbia brand generated double-digit constant-currency growth in the quarter and the first half of the year, led by U.S. wholesale and direct-to-consumer performance. SOREL’s progress towards becoming a year-round brand is evident in the success of Spring 2019 styles, which contributed to greater than 30 percent constant-currency growth in the quarter and first half of the year. After several challenging years, Mountain Hardwear generated double-digit constant-currency growth in the quarter and is poised for continued growth in the second half of the year."

"As we enter the second half of 2019, our brand, channel, geographic and supply chain diversification positions us for continued profitable growth despite global economic and trade uncertainty. Our first half results, Fall 2019 advance orders and current business momentum position us to deliver another record year of growth and profitability."

Our profitable growth trajectory and fortress balance sheet, with cash and short-term investments of over $500 million and no long-term debt, provide a foundation of strength and confidence from which we will continue investing in our strategic priorities to:

  • drive brand awareness and sales growth through increased, focused demand creation investments;
  • enhance consumer experience and digital capabilities in all our channels and geographies;
  • expand and improve global direct-to-consumer operations with supporting processes and systems; and
  • invest in our people and optimize our organization across our portfolio of brands."

"We are making these investments to build on our strengths as a brand-led, consumer-focused organization and to enable sustainable long-term profitable growth."

CFO's Commentary Available Online

For a detailed review of the Company's second quarter and first half 2019 financial results and full year 2019 financial outlook please refer to the CFO Commentary exhibit furnished to the Securities and Exchange Commission (the "SEC") on Form 8‑K and published on the Investor Relations section of the Company's website at http://investor.columbia.com/results.cfm at approximately 4:15 p.m. ET today. Analysts and investors are encouraged to review this commentary prior to participating in the conference call.

Non-GAAP Financial Measures

Throughout this press release, non-GAAP amounts in second quarter 2018 exclude $1.9 million in Project CONNECT expenses and discrete costs ($1.4 million net of tax) and $0.1 million in incremental income tax expense related to the Tax Cuts and Jobs Act (“TCJA”). References to non-GAAP financial measures in first half 2018 exclude $12.9 million in Project CONNECT program expenses and discrete costs ($9.8 million net of tax), and $1.2 million in incremental provisional income tax expense related to the TCJA. These excluded items were not applicable to second quarter and first half 2019 results.

Second Quarter 2019 Financial Results

(All comparisons are between second quarter 2019 and second quarter 2018, unless otherwise noted.)

Please note the second quarter is our lowest volume sales quarter and small changes in the timing of product shipments and expenses can have a material impact on reported results.

Net sales increased 9 percent (11 percent constant-currency) to $526.2 million, from $481.6 million for the comparable period in 2018.

Gross margin expanded 70 basis points to 48.2 percent of net sales, from 47.5 percent for the comparable period in 2018.

SG&A expenses increased 8 percent to $240.8 million, or 45.8 percent of net sales, from $222.2 million, or 46.1 percent of net sales, for the comparable period in 2018. SG&A expenses increased 9 percent from non-GAAP SG&A expenses of $220.3 million, or 45.7 percent of net sales, for the comparable period in 2018.

Operating income increased 68 percent to $16.4 million, or 3.1 percent of net sales, from $9.7 million, or 2.0 percent of net sales, for the comparable period in 2018. Operating income increased 41 percent from non-GAAP operating income of $11.6 million, or 2.4 percent of sales, for the comparable period in 2018.

Net income increased 137 percent to $23.0 million, or $0.34 per diluted share, from $9.7 million, or $0.14 per diluted share, for the comparable period in 2018. Net income increased 104 percent from non-GAAP net income of $11.3 million, or $0.16 per diluted share for the comparable period in 2018. Diluted earnings per share includes $0.11 of one-time tax benefits primarily related to the passage of a Swiss tax reform package which resulted in a one-time tax benefit of $6.6 million. Second quarter 2019 net income also includes the benefit of full ownership of our China business, which became a wholly owned subsidiary effective January 2019. In second quarter 2018, the non-controlling interest share of net income was $0.8 million, or $0.01 per diluted share.

First Half 2019 Financial Results

(All comparisons are between first half 2019 and first half 2018, unless otherwise noted).

Net sales increased 8 percent (10 percent constant-currency) to $1,180.8 million, compared to $1,088.9 million for the comparable period in 2018.

Gross margin expanded 150 basis points to 50.0 percent of net sales, from 48.5 percent for the comparable period in 2018.

SG&A expenses increased 6 percent to $492.5 million, or 41.7 percent of net sales, from $465.6 million, or 42.8 percent of net sales, for the comparable period in 2018. SG&A expenses increased 9 percent from non-GAAP SG&A expenses of $452.7 million, or 41.6 percent of net sales, for the comparable period in 2018.

Operating income increased 51 percent to $104.3 million, representing 8.8 percent of net sales, compared to operating income of $69.1 million, or 6.3 percent of net sales, for the comparable period in 2018. Operating income increased 27 percent from non-GAAP operating income of $81.9 million, or 7.5 percent of net sales, for the comparable period in 2018.

Net income increased 77 percent to $97.2 million, or $1.41 per diluted share, compared to $54.8 million, or $0.77 per diluted share, for the comparable period in 2018. Net income increased 48 percent from non-GAAP net income of $65.8 million, or $0.93 per diluted share for the comparable period in 2018. First half 2019 net income includes the benefit of full ownership of our China business, which became a wholly owned subsidiary effective January 2019. In first half 2018, the non-controlling interest share of net income was $4.4 million, or $0.06 per diluted share.

Balance Sheet as of June 30, 2019

Cash, cash equivalents and short-term investments totaled $524.3 million, compared to $774.7 million at June 30, 2018.

Inventories increased 33 percent to $756.4 million, compared to $570.5 million at June 30, 2018, resulting from earlier receipts of Fall 2019 inventory in order to alleviate manufacturing capacity constraints and, to a lesser degree, increased volume to support business growth.

Share Repurchases for the Six Months Ended June 30, 2019

The Company repurchased 1,032,972 shares of common stock for an aggregate of $100.4 million, or $97.22 average price per share.

Regular Quarterly Cash Dividend

At its regular board meeting on July 19, 2019, the board of directors authorized a regular quarterly cash dividend of $0.24 per share, payable on August 29, 2019 to shareholders of record on August 15, 2019.

Conference Call

The Company will host a conference call at 5:00 p.m. ET today to review its second quarter and first half 2019 financial results and full year 2019 financial outlook. Dial (877) 407-9205 to participate. The call will also be webcast live on the Investor Relations section of the Company's website at http://investor.columbia.com.

Third Quarter 2019 Reporting Schedule

Columbia Sportswear Company plans to report third quarter and year-to-date 2019 financial results on Wednesday, October 30, 2019 at approximately 4:00 p.m. ET. Following issuance of the earnings release, a commentary reviewing the Company's third quarter 2019 financial results will be furnished to the SEC on Form 8-K and published on the Investor Relations section of the Company's website at http://investor.columbia.com/results.cfm. A public webcast of Columbia's earnings conference call will follow at 5:00 p.m. ET at http://investor.columbia.com.

Supplemental Financial Information

Since Columbia Sportswear Company is a global company, the comparability of its operating results reported in U.S. dollars is affected by foreign currency exchange rate fluctuations because the underlying currencies in which it transacts change in value over time compared to the U.S. dollar. To supplement financial information reported in accordance with GAAP, the Company discloses constant-currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of changes in the exchange rates used to translate net sales generated in foreign currencies into U.S. dollars. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into U.S. dollars at the average exchange rates that were in effect during the comparable period of the prior year. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors may find the non-GAAP measures useful by reviewing our net sales results without the volatility in foreign currency exchange rates. This non-GAAP financial measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results.

Additionally, this document includes references to various other non-GAAP financial measures related to 2018 that may exclude program expenses, discrete costs and associated tax effects related to Project CONNECT, TCJA-related income tax expense, and a recovery in connection with an insurance claim and related tax effects. The related tax effects of program expenses and discrete costs related to Project CONNECT and the insurance claim recovery benefit were calculated using the respective statutory tax rates for applicable jurisdictions. Management believes that these non-GAAP financial measures enable useful and meaningful comparisons of our operating performance from period to period because they exclude the effects of the aforementioned items above that may not be indicative of our core operating results.

These non-GAAP financial measures, including constant-currency net sales, should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP. The Company provides a reconciliation of non-GAAP measures to the most directly comparable financial measure calculated in accordance with GAAP. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" table included herein. The non-GAAP financial measures and constant-currency information presented may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws, including statements regarding anticipated results, net sales and net sales growth, gross margin, operating expenses, licensing income, operating income, operating margins, net income, earnings per share, income tax rates and the effects of tax reform (including the TCJA) as well as changes in the Company's geographic mix of pre-tax income and other discrete events that may occur during the year, share count, SG&A expenses, including deleverage, effects of foreign currency exchange rates, inventory growth, capital expenditures, projected growth or decline in specific geographies, channels and brands, continued investment in our strategic priorities, expected full-year growth and profitability, and our ability to adapt our business and realize the anticipated benefits of our investments in our strategic priorities, including Project CONNECT. Forward-looking statements often use words such as "will", "anticipate", "estimate", "expect", "should", "may" and other words and terms of similar meaning or reference future dates. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors," and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. Potential risks and uncertainties that may affect our future revenues, earnings and performance and could cause the actual results of operations or financial condition of the Company to differ materially from the anticipated results expressed or implied by forward-looking statements in this document include: loss of key customer accounts; our ability to effectively execute our business strategies, including initiatives to implement business process enhancements and information technology (“IT”) systems and investments in our DTC businesses; our ability to maintain the strength and security of our IT systems; the effects of unseasonable weather, including global climate change; the seasonality of our business; trends affecting consumer spending, including changes in the level of consumer spending, and retail traffic patterns; unfavorable economic conditions generally, the financial health of our customers and retailer consolidation; higher than expected rates of order cancellations; changes affecting consumer demand and preferences and fashion trends; changes in international, federal or state tax, labor and other laws and regulations that affect our business, including changes in corporate tax rates, unanticipated impacts resulting from additional guidance about and application of the TCJA, tariffs, international trade policy and geopolitical tensions, or increasing wage rates; our ability to attract and retain key personnel; risks inherent in doing business in foreign markets, including fluctuations in currency exchange rates, global credit market conditions and changes in global regulation and economic and political conditions; volatility in global production and transportation costs and capacity; our ability to effectively source and deliver our products to customers and consumers in a timely manner; our dependence on independent manufacturers and suppliers and our ability to source finished products and components at competitive prices from them or at all; the effectiveness of our sales and marketing efforts; business disruptions and acts of terrorism, cyber-attacks or military activities around the globe; intense competition in the industry; our ability to establish and protect our intellectual property; and our ability to develop innovative products. The Company cautions that forward-looking statements are inherently less reliable than historical information. The Company does not undertake any duty to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About Columbia Sportswear Company

Columbia Sportswear Company has assembled a portfolio of brands for active lives, making it a leader in the global active lifestyle apparel, footwear, accessories, and equipment industry. Founded in 1938 in Portland, Oregon, the Company's brands are today sold in approximately 90 countries. In addition to the Columbia® brand, Columbia Sportswear Company also owns the Mountain Hardwear®, SOREL® and prAna® brands. To learn more, please visit the Company's websites at www.columbia.com, www.mountainhardwear.com, www.sorel.com, and www.prana.com.

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

June 30,

 

 

2019

 

2018

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

386,150

 

 

$

510,656

 

Short-term investments

 

138,198

 

 

264,014

 

Accounts receivable, net

 

280,641

 

 

238,675

 

Inventories

 

756,378

 

 

570,473

 

Prepaid expenses and other current assets

 

100,800

 

 

76,399

 

Total current assets

 

1,662,167

 

 

1,660,217

 

Property, plant, and equipment, net

 

312,948

 

 

280,726

 

Operating lease right-of-use assets

 

368,856

 

 

 

Intangible assets, net

 

125,085

 

 

128,065

 

Goodwill

 

68,594

 

 

68,594

 

Deferred income taxes

 

82,418

 

 

70,351

 

Other non-current assets

 

42,379

 

 

38,997

 

Total assets

 

$

2,662,447

 

 

$

2,246,950

 

LIABILITIES AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

309,945

 

 

$

290,812

 

Accrued liabilities

 

200,816

 

 

191,511

 

Operating lease liabilities

 

60,804

 

 

 

Income taxes payable

 

6,416

 

 

4,000

 

Total current liabilities

 

577,981

 

 

486,323

 

Non-current operating lease liabilities

 

345,063

 

 

 

Income taxes payable

 

53,216

 

 

60,827

 

Deferred income taxes

 

8,518

 

 

13

 

Other long-term liabilities

 

22,475

 

 

45,412

 

Total liabilities

 

1,007,253

 

 

592,575

 

Equity:

 

 

 

 

Columbia Sportswear Company shareholders' equity

 

1,655,194

 

 

1,640,400

 

Non-controlling interest

 

 

 

13,975

 

Total equity

 

1,655,194

 

 

1,654,375

 

Total liabilities and equity

 

$

2,662,447

 

 

$

2,246,950

 

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Net sales

 

$

526,210

 

 

$

481,619

 

 

$

1,180,818

 

 

$

1,088,927

 

Cost of sales

 

272,619

 

 

252,998

 

 

590,498

 

 

560,868

 

Gross profit

 

253,591

 

 

228,621

 

 

590,320

 

 

528,059

 

 

 

48.2

%

 

47.5

%

 

50.0

%

 

48.5

%

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

240,763

 

 

222,192

 

 

492,518

 

 

465,560

 

Net licensing income

 

3,537

 

 

3,320

 

 

6,521

 

 

6,571

 

Income from operations

 

16,365

 

 

9,749

 

 

104,323

 

 

69,070

 

Interest income, net

 

2,571

 

 

2,928

 

 

5,971

 

 

5,224

 

Other non-operating income (expense), net

 

1,032

 

 

(96

)

 

1,478

 

 

(364

)

Income before income tax

 

19,968

 

 

12,581

 

 

111,772

 

 

73,930

 

Income tax benefit (expense)

 

3,061

 

 

(2,086

)

 

(14,566

)

 

(14,706

)

Net income

 

23,029

 

 

10,495

 

 

97,206

 

 

59,224

 

Net income attributable to non-controlling interest

 

 

 

758

 

 

 

 

4,380

 

Net income attributable to Columbia Sportswear Company

 

$

23,029

 

 

$

9,737

 

 

$

97,206

 

 

$

54,844

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Columbia Sportswear Company:

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.14

 

 

$

1.43

 

 

$

0.78

 

Diluted

 

$

0.34

 

 

$

0.14

 

 

$

1.41

 

 

$

0.77

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

67,930

 

 

70,021

 

68,109

 

 

70,050

 

Diluted

 

68,560

 

 

70,748

 

68,825

 

 

70,824

 

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

Net income

 

$

97,206

 

 

$

59,224

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation, amortization and non-cash lease expense

 

57,487

 

 

29,067

 

Loss on disposal or impairment of property, plant, and equipment

 

1,599

 

 

578

 

Deferred income taxes

 

(4,338

)

 

2,041

 

Stock-based compensation

 

8,781

 

 

6,599

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

169,631

 

 

188,897

 

Inventories

 

(232,117

)

 

(140,897

)

Prepaid expenses and other current assets

 

(21,815

)

 

(6,411

)

Other assets

 

(4,830

)

 

(11,867

)

Accounts payable

 

41,469

 

 

37,968

 

Accrued liabilities

 

(75,360

)

 

(49,781

)

Income taxes payable

 

(13,967

)

 

(12,835

)

Operating lease assets and liabilities

 

(27,068

)

 

 

Other liabilities

 

5,919

 

 

(3,258

)

Net cash provided by operating activities

 

2,597

 

 

99,325

 

Cash flows from investing activities:

 

 

 

 

Purchases of short-term investments

 

(181,257

)

 

(257,979

)

Sales and maturities of short-term investments

 

308,501

 

 

88,794

 

Capital expenditures

 

(50,800

)

 

(29,618

)

Proceeds from sale of property, plant, and equipment

 

 

 

19

 

Net cash provided by (used in) investing activities

 

76,444

 

 

(198,784

)

Cash flows from financing activities:

 

 

 

 

Proceeds from credit facilities

 

23,208

 

 

 

Repayments on credit facilities

 

(23,208

)

 

 

Proceeds from issuance of common stock related to stock-based compensation

 

11,286

 

 

14,971

 

Tax payments related to stock-based compensation

 

(5,589

)

 

(4,131

)

Repurchase of common stock

 

(100,293

)

 

(40,106

)

Purchase of non-controlling interest

 

(17,880

)

 

 

Cash dividends paid

 

(32,686

)

 

(30,856

)

Net cash used in financing activities

 

(145,162

)

 

(60,122

)

Net effect of exchange rate changes on cash

 

476

 

 

(2,929

)

Net decrease in cash, cash equivalents and restricted cash

 

(65,645

)

 

(162,510

)

Cash, cash equivalents and restricted cash, beginning of period

 

451,795

 

 

673,166

 

Cash, cash equivalents and restricted cash, end of period

 

$

386,150

 

 

$

510,656

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

Property, plant and equipment acquired through increase in liabilities

 

$

9,524

 

 

$

4,009

 

Dividend to non-controlling interest declared but not yet paid

 

$

 

 

$

21,332

 

COLUMBIA SPORTSWEAR COMPANY

Supplemental Financial Information

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

 

Three Months Ended June 30, 2018

 

GAAP Measures
(As Reported)

 

Adjust for Project
CONNECT Costs
(1)

 

Adjust for Effects
of the TCJA
(2)

 

Non-GAAP
Measures

Selling, general and administrative expenses

$

222,192

 

 

$

(1,884

)

 

$

 

 

$

220,308

 

Income from operations

9,749

 

 

1,884

 

 

 

 

11,633

 

Income before income tax

12,581

 

 

1,884

 

 

 

 

14,465

 

Income tax benefit (expense)

(2,086

)

 

(448

)

 

136

 

 

(2,398

)

Net income

10,495

 

 

1,436

 

 

136

 

 

12,067

 

Net income attributable to Columbia Sportswear Company

9,737

 

 

1,436

 

 

136

 

 

11,309

 

Earnings per share attributable to Columbia Sportswear Company:

 

 

 

 

 

 

 

Basic

$

0.14

 

 

 

 

 

 

$

0.16

 

Diluted

$

0.14

 

 

 

 

 

 

$

0.16

 

 

Six Months Ended June 30, 2018

 

GAAP Measures
(As Reported)

 

Adjust for Project
CONNECT Costs
(1)

 

Adjust for Effects
of the TCJA
(2)

 

Non-GAAP
Measures

Selling, general and administrative expenses

$

465,560

 

 

$

(12,878

)

 

$

 

 

$

452,682

 

Income from operations

69,070

 

 

12,878

 

 

 

 

81,948

 

Income before income tax

73,930

 

 

12,878

 

 

 

 

86,808

 

Income tax benefit (expense)

(14,706

)

 

(3,065

)

 

1,179

 

 

(16,592

)

Net income

59,224

 

 

9,813

 

 

1,179

 

 

70,216

 

Net income attributable to Columbia Sportswear Company

54,844

 

 

9,813

 

 

1,179

 

 

65,836

 

Earnings per share attributable to Columbia Sportswear Company:

 

 

 

 

 

 

 

Basic

$

0.78

 

 

 

 

 

 

$

0.94

 

Diluted

$

0.77

 

 

 

 

 

 

$

0.93

 

 

(1) Amounts reflect professional fees, severance and other program expenses related to Project CONNECT in 2018 that the Company believes are incremental to the Company's ongoing operations. The related tax effects of these charges were calculated using the respective statutory tax rates for applicable jurisdictions.

(2) Amounts reflect an incremental provisional TCJA-related tax expense, primarily driven by refinement in the calculation of withholding taxes on our deferred tax liabilities, which drove further refinement of the Company's provisional estimates that were recorded in fourth quarter 2017.

 

COLUMBIA SPORTSWEAR COMPANY

Supplemental Financial Information

Net Sales Growth - Constant-currency Basis

(In millions, except percentage changes)

(Unaudited)

 

Three Months Ended June 30,

 

 

 

Adjust for

 

Constant-

 

 

 

 

 

Constant-

 

Reported

 

Foreign

 

currency

 

Reported

 

Reported

 

currency

 

Net Sales

 

Currency

 

Net Sales

 

Net Sales

 

Net Sales

 

Net Sales

 

2019

 

Translation

 

2019(1)

 

2018

 

% Change

 

% Change(1)

Geographical Net Sales:

 

 

 

 

 

 

 

 

 

 

 

United States

$

315.5

 

 

$

 

 

$

315.5

 

 

$

280.2

 

 

13%

 

13%

LAAP

101.6

 

 

4.4

 

 

106.0

 

 

100.8

 

 

1%

 

5%

EMEA

91.6

 

 

2.4

 

 

94.0

 

 

85.0

 

 

8%

 

11%

Canada

17.5

 

 

0.8

 

 

18.3

 

 

15.6

 

 

12%

 

17%

Total

$

526.2

 

 

$

7.6

 

 

$

533.8

 

 

$

481.6

 

 

9%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

Brand Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Columbia

$

454.9

 

 

$

7.3

 

 

$

462.2

 

 

$

414.8

 

 

10%

 

11%

SOREL

15.1

 

 

 

 

15.1

 

 

11.4

 

 

32%

 

32%

prAna

38.7

 

 

 

 

38.7

 

 

38.1

 

 

2%

 

2%

Mountain Hardwear

17.5

 

 

0.3

 

 

17.8

 

 

16.0

 

 

9%

 

11%

Other

 

 

 

 

 

 

1.3

 

 

(100)%

 

(100)%

Total

$

526.2

 

 

$

7.6

 

 

$

533.8

 

 

$

481.6

 

 

9%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

Product Category Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Apparel, Accessories and Equipment

$

432.2

 

 

$

5.4

 

 

$

437.6

 

 

$

394.6

 

 

10%

 

11%

Footwear

94.0

 

 

2.2

 

 

96.2

 

 

87.0

 

 

8%

 

11%

Total

$

526.2

 

 

$

7.6

 

 

$

533.8

 

 

$

481.6

 

 

9%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

Channel Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Wholesale

$

296.2

 

 

$

4.0

 

 

$

300.2

 

 

$

263.9

 

 

12%

 

14%

DTC

230.0

 

 

3.6

 

 

233.6

 

 

217.7

 

 

6%

 

7%

Total

$

526.2

 

 

$

7.6

 

 

$

533.8

 

 

$

481.6

 

 

9%

 

 

 

(1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against the U.S. dollar between comparable reporting periods. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into U.S. dollars at the average exchange rates that were in effect during the comparable period of the prior year.

COLUMBIA SPORTSWEAR COMPANY

Supplemental Financial Information

Net Sales Growth - Constant-currency Basis

(In millions, except percentage changes)

(Unaudited)

 

Six Months Ended June 30,

 

 

 

Adjust for

 

Constant-

 

 

 

 

 

Constant-

 

Reported

 

Foreign

 

currency

 

Reported

 

Reported

 

currency

 

Net Sales

 

Currency

 

Net Sales

 

Net Sales

 

Net Sales

 

Net Sales

 

2019

 

Translation

 

2019(1)

 

2018

 

% Change

 

% Change(1)

Geographical Net Sales:

 

 

 

 

 

 

 

 

 

 

 

United States

$

727.7

 

 

$

 

 

$

727.7

 

 

$

643.0

 

 

13%

 

13%

LAAP

234.5

 

 

8.2

 

 

242.7

 

 

232.4

 

 

1%

 

4%

EMEA

162.9

 

 

6.7

 

 

169.6

 

 

156.8

 

 

4%

 

8%

Canada

55.7

 

 

3.1

 

 

58.8

 

 

56.7

 

 

(2)%

 

4%

Total

$

1,180.8

 

 

$

18.0

 

 

$

1,198.8

 

 

$

1,088.9

 

 

8%

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

Brand Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Columbia

$

1,007.1

 

 

$

16.8

 

 

$

1,023.9

 

 

$

923.6

 

 

9%

 

11%

SOREL

54.6

 

 

0.6

 

 

55.2

 

 

42.2

 

 

29%

 

31%

prAna

79.9

 

 

 

 

79.9

 

 

80.4

 

 

(1)%

 

(1)%

Mountain Hardwear

39.2

 

 

0.6

 

 

39.8

 

 

40.4

 

 

(3)%

 

(1)%

Other

 

 

 

 

 

 

2.3

 

 

(100)%

 

(100)%

Total

$

1,180.8

 

 

$

18.0

 

 

$

1,198.8

 

 

$

1,088.9

 

 

8%

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

Product Category Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Apparel, Accessories and Equipment

$

958.2

 

 

$

12.9

 

 

$

971.1

 

 

$

884.6

 

 

8%

 

10%

Footwear

222.6

 

 

5.1

 

 

227.7

 

 

204.3

 

 

9%

 

11%

Total

$

1,180.8

 

 

$

18.0

 

 

$

1,198.8

 

 

$

1,088.9

 

 

8%

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

Channel Net Sales:

 

 

 

 

 

 

 

 

 

 

 

Wholesale

$

659.4

 

 

$

11.1

 

 

$

670.5

 

 

$

611.6

 

 

8%

 

10%

DTC

521.4

 

 

6.9

 

 

528.3

 

 

477.3

 

 

9%

 

11%

Total

$

1,180.8

 

 

$

18.0

 

 

$

1,198.8

 

 

$

1,088.9

 

 

8%

 

10%

 

(1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against the U.S. dollar between comparable reporting periods. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into U.S. dollars at the average exchange rates that were in effect during the comparable period of the prior year.

COLUMBIA SPORTSWEAR COMPANY

Supplemental Financial Information

Reconciliation of GAAP to Non-GAAP Updated Full Year 2019 Financial Outlook

(Unaudited)

All projections related to anticipated future results are forward-looking in nature and are subject to risks and uncertainties which may cause actual results to differ, perhaps materially. For more information on these risks and uncertainties please refer to the "Forward Looking Statements" section.

 

Twelve Months Ended December 31, 2018

 

2019 Financial Outlook

 

GAAP
Measures
(As
Reported)

 

Adjust for
Project
CONNECT
Costs(1)

 

Adjust for
Effects of
the TCJA (2)

 

Adjust for
Effects of
Insurance
Recovery (3)

 

Non-GAAP
Measures

 

 

 

Commentary compared to:

(In thousands, except per share amounts)

 

 

 

 

 

2019 Financial
Outlook

 

2018

 

2018 non-GAAP

Net sales

$

2,802,326

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$3.00 to $3.04 billion

 

7.0% to 8.5% growth

 

 

Gross profit

1,386,348

 

 

 

 

 

 

 

 

 

 

gross margin of
approximately 50.3%

 

approximately 80 bps
expansion

 

 

Selling, general and administrative expenses

1,051,152

 

 

(15,766

)

 

 

 

4,317

 

 

1,039,703

 

 

37.7% to 37.8%
percent of net sales

 

20 bps to 30 bps
deleverage

 

60 bps to 70 bps
deleverage

Income from operations

350,982

 

 

15,766

 

 

 

 

(4,317

)

 

362,431

 

 

$388 to $396 million

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

12.9% to 13.0%

 

40 bps to 50 bps
expansion

 

flat to 10 bps expansion

Income tax expense

(85,769

)

 

(3,752

)

 

5,064

 

 

1,027

 

 

(83,430

)

 

approximately 20%

 

 

 

 

Net income attributable to non-controlling interest

6,692

 

 

 

 

 

 

 

 

 

 

$0 million

 

 

 

 

Net income attributable to Columbia Sportswear Company

$

268,256

 

 

$

12,014

 

 

$

5,064

 

 

$

(3,290

)

 

$

282,044

 

 

$319 to $325 million

 

 

 

 

Earnings per share attributable to Columbia Sportswear Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

3.81

 

 

 

 

 

 

 

 

$

4.01

 

 

$4.65 to $4.75

 

 

 

 

 

(1) Amounts reflect professional fees, severance and other program expenses related to Project CONNECT that the Company believes are incremental to its ongoing operations. The related tax effects of these charges were calculated using the respective statutory tax rates for applicable jurisdictions.

(2) In 2018, the Company incurred $5.1 million in incremental income tax expense related to the TCJA.

(3) Amounts reflect a benefit from a recovery in connection with an insurance claim received in third quarter 2018 that the Company believes is incremental to the Company's ongoing operations.

 

Contacts

Andrew Burns
Director of Investor Relations
Columbia Sportswear Company
(503) 985-4112
aburns@columbia.com

Contacts

Andrew Burns
Director of Investor Relations
Columbia Sportswear Company
(503) 985-4112
aburns@columbia.com