Perry Ellis International Reports Third Quarter Fiscal 2013 Results *Total revenue of $236.2 million in line with Company guidance *GAAP diluted EPS of $0.21 *Adjusted diluted EPS of $0.25 *Golf, women’s contemporary, and direct to consumer businesses continue strong profitable momentum *Inventory decreased 21% compared to last year to $157 million *Company maintains full fiscal 2013 adjusted diluted EPS guidance in a range of $1.75 - $1.80 Business Wire MIAMI -- November 15, 2012 Perry Ellis International (NASDAQ:PERY) today reported results for the third quarter ended October 27, 2012 (“third quarter of fiscal 2013”). Third Quarter Results from Operations In the third quarter of fiscal 2013, total revenues were $236.2 million compared to $248.4 million in the quarter ended October 29, 2011 (“third quarter of fiscal 2012”) and in-line with Company guidance of an expected mid-single digit decrease. The Company noted that continued growth within golf, direct to consumer and women’s contemporary was offset by planned decreases in its Perry Ellis and Rafaella collection businesses. Oscar Feldenkreis, President and Chief Operating Officer, commented, “The third quarter was highlighted by continued positive momentum in our Golf and direct to consumer platforms, substantial progress on our initiatives to improve our Perry Ellis and Rafaella collection businesses and the disciplined management of expenses and continued strong cash flow. We are very pleased with the growth we are driving across our golf platforms through all channels of distribution. Across our direct to consumer business we are generating consistent sales and margin increases fueled by our unique products and focused merchandising planning by door. We are well on our way with our repositioning efforts in our Perry Ellis and Rafaella collection businesses, and expect an improved consumer response to our holiday collections in the fourth quarter and an even greater positive impact in spring 2013.” Gross margin for the third quarter of fiscal 2013 was 32.1% as compared to 33.2% for the comparable period last year. The decline was attributable to higher promotional levels in the collection businesses coupled with the lower margins on the Callaway transitioned businesses. On the positive side, gross margin expansion was realized in the golf business, as well as in the direct to consumer business. Selling, general and administrative (“SG&A”) expenses for the third quarter of fiscal 2013 decreased $2.4 million to $64.0 million compared to $66.4 million in the third quarter of fiscal 2012. The Company remains disciplined in this area as it executes its streamlining and consolidating initiatives. As reported under generally accepted accounting principles (“GAAP”), net income for the third quarter of fiscal 2013 was $3.2 million, or earnings per fully diluted share of $0.21, compared to net income of $6.5 million, or $0.40 per fully diluted share in the third quarter of fiscal 2012. After considering the costs of the exit of underperforming brands, and the streamlining and consolidation of facilities and other strategic initiatives, earnings per fully diluted share, as adjusted, for the third quarter of fiscal 2013 was $0.25 compared to earnings per fully diluted share, as adjusted, of $0.40 in the third quarter of fiscal 2012. (See attached reconciliation “Table 1”) Adjusted EBITDA for the third quarter totaled $12.5 million or 5.3% of revenue. (See attached reconciliation “Table 2”) Nine Months Operations Review For the nine months ended October 27, 2012 total revenues were $711.2 million compared to $751.1 million for the nine months ended October 29, 2011. The revenue reduction during the first nine months of the fiscal year, as compared to last year, was primarily attributable to softness in the Company’s collection businesses. Adjusted EBITDA for the first nine months of fiscal 2013 totaled $42.9 million or 6.0% of revenue. (See attached reconciliation “Table 2”) Net income for the first nine months of fiscal 2013 was $10.4 million, or $0.68 per fully diluted share, compared to $23.7 million, or $1.47 per fully diluted share in the first nine months of fiscal 2012. (See attached reconciliation “Table 1”) After considering the costs associated with the exit of underperforming brands and businesses, the voluntary retirement program, the streamlining and consolidating of operations and strategic initiatives, earnings per fully diluted share, as adjusted, for the first nine months of fiscal 2013 was $0.95 compared to earnings per fully diluted share, as adjusted, of $1.55 in the first nine months of fiscal 2012. For the nine months of fiscal 2012, earnings per fully diluted share, as adjusted, excludes costs related to the impact of early extinguishment of debt and duplicate interest expense. (See attached reconciliation “Table 1”) Balance Sheet Update George Feldenkreis, Chairman and CEO of Perry Ellis International commented, “We are extremely pleased with the continued strengthening of our balance sheet. Inventory reduction continues to tighten ahead of sales. We believe that we have the balance sheet to fund our growth in our core businesses as well as provide ample capacity and liquidity under a wide range of economic conditions.” The Company ended the third quarter of fiscal 2013 with $51.7 million in cash and cash equivalents and full availability under its senior credit facility. Inventories at quarter end totaled $157.5 million, a reduction of $40.8 million or 21% compared to $200.3 million as of October 29, 2011. As a result of the disciplined management of inventory, the Company ended the period with a net debt to total capitalization of approximately 25% as compared to 32% for the comparable prior year period. Fiscal 2013 Guidance The Company remains comfortable with revenue guidance ranging from $990 million to $1 billion, as well as fully diluted earnings per share as adjusted in a range of $1.75 to $1.80. About Perry Ellis International Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories and fragrances, as well as select children’s apparel. The Company's collection of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men's and women's swimwear is available through all major levels of retail distribution. The Company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis®, Jantzen®, Laundry by Shelli Segal®, C&C California®, Rafaella®, Cubavera®, Ben Hogan®, Centro®, Solero®, Munsingwear®, Savane®, Original Penguin® by Munsingwear®, Grand Slam®, Natural Issue®, Pro Player®, the Havanera Co.®, Axis®, Gotcha®, Girl Star®, MCD®, John Henry®, Mondo di Marco®, Redsand®, Manhattan®, Axist®, Farah®, Anchor Blue® and Miller’s Outpost®. The Company enhances its roster of brands by licensing trademarks from third parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR® and Champions Tour® for golf apparel. Additional information on the Company is available at http://www.pery.com. Safe Harbor Statement We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "proforma," "project," "seek," "should," "target," or "will" and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, recent and future economic conditions, including turmoil in the financial and credit markets, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to protect our trademarks, our ability to integrate acquired businesses, trademarks, trade names and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our ability to carry out growth strategies including expansion in international and direct to consumer retail markets, the level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial activities due to terrorist activity and armed conflict, and other factors set forth in Perry Ellis International's filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's, except per share information) INCOME STATEMENT DATA: Three Months Ended Nine Months Ended October 27, October 29, October 27, October 2012 2011 2012 29, 2011 Revenues Net sales $ 229,330 $ 242,116 $ 691,436 $ 733,487 Royalty income 6,918 6,304 19,772 17,657 Total revenues 236,248 248,420 711,208 751,144 Cost of sales 160,453 165,970 478,348 499,456 Gross profit 75,795 82,450 232,860 251,688 Operating expenses Selling, general and 63,984 66,356 196,434 193,101 administrative expenses Depreciation and 3,424 3,369 10,314 9,982 amortization Total operating 67,408 69,725 206,748 203,083 expenses Operating 8,387 12,725 26,112 48,605 income Costs on early extinguishment - - - 1,306 of debt Interest 3,689 3,868 11,011 12,303 expense Net income before income 4,698 8,857 15,101 34,996 taxes Income tax 1,518 2,348 4,687 11,262 provision Net income $ 3,180 $ 6,509 $ 10,414 $ 23,734 Net income, per share Basic $ 0.22 $ 0.42 $ 0.71 $ 1.58 Diluted $ 0.21 $ 0.40 $ 0.68 $ 1.47 Weighted average number of shares outstanding Basic 14,662 15,317 14,669 15,009 Diluted 15,295 16,391 15,275 16,131 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's) BALANCE SHEET DATA: As of October 27, 2012 January 28, 2012 Assets Current assets: Cash and cash equivalents $ 51,659 $ 24,116 Accounts receivable, net 154,947 145,563 Inventories 157,473 198,264 Other current assets 28,789 33,733 Total current assets 392,868 401,676 Property and equipment, net 54,337 56,496 Intangible assets, net 248,517 242,634 Goodwill 13,794 13,794 Other assets 9,296 9,595 Total assets $ 718,812 $ 724,195 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 89,418 $ 80,253 Accrued expenses and other 21,058 23,142 liabilities Accrued interest payable 1,018 4,186 Unearned revenues 4,363 4,179 Total current liabilities 115,857 111,760 Long term liabilities: Senior subordinated notes payable, 150,000 150,000 net Senior credit facility - 21,679 Real estate mortgages 24,415 25,114 Deferred pension obligation 15,618 17,326 Unearned revenues and other 34,170 31,821 long-term liabilities Total long-term liabilities 224,203 245,940 Total liabilities 340,060 357,700 Equity Total equity 378,752 366,495 Total liabilities and equity $ 718,812 $ 724,195 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Table 1 Reconciliation of the three and nine months ended October 27, 2012 and October 29, 2011 net income and earnings per share to adjusted net income and adjusted earnings per share. (UNAUDITED) (amounts in 000's, except per share information) Three Months Ended Nine Months Ended October October October October 27, 2012 29, 2011 27, 2012 29, 2011 Net income $ 3,180 $ 6,509 $ 10,414 $ 23,734 Plus: Costs on exited 400 - 2,245 - brands Costs of streamlining and consolidation of 936 - 2,397 - operations, and other strategic initiatives Costs of voluntary - - 2,420 - retirement Costs on early extinguishment of - - - 1,306 debt Duplicate interest from March 8 to - - - 745 April 6, 2011 Less: Gain on asset (410) - (410) sales Tax benefit (358) - (2,545) (718) Net income, as $ 3,748 $ 6,509 $ 14,521 $ 25,067 adjusted Three Months Ended Nine Months Ended October October October October 27, 2012 29, 2011 27, 2012 29, 2011 Net income per $ 0.21 $ 0.40 $ 0.68 $ 1.47 share, diluted Net per share costs on exited 0.02 - 0.09 - brands Net per share costs of streamlining and consolidation of 0.04 - 0.10 - operations, and other strategic initiatives Net per share costs of voluntary - - 0.10 - retirement Net per share costs on early - - - 0.05 extinguishment of debt Net per share duplicate interest - - - 0.03 from March 8 to April 6, 2011 Net per share gain (0.02) - (0.02) - on asset sales Adjusted net income per share, $ 0.25 $ 0.40 $ 0.95 $ 1.55 diluted "Adjusted net income per share, diluted" consists of "net income per share, diluted" adjusted for the impact of the costs on exited brands, costs of streamlining and consolidation of operations, and other strategic initiatives, costs of voluntary retirement, early extinguishment of debt, duplicate interest from March 8, 2011 to April 6, 2011, the time during which the retired debt and the new debt were simultaneously outstanding, and gain on asset sales. These costs and gain are not indicative of our core operations and thus to get a more comparable result with the operating performance of the apparel industry, they have been removed, net of taxes, from the calculation. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Table 2 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA(1) (UNAUDITED) (amounts in 000's) Three Months Ended Nine Months Ended October 27, October 29, October 27, October 29, 2012 2011 2012 2011 Net income $ 3,180 $ 6,509 $ 10,414 $ 23,734 Plus: Depreciation and 3,424 3,369 10,314 9,982 amortization Interest 3,689 3,868 11,011 12,303 expense Costs on early extinguishment - - - 1,306 of debt Income tax 1,518 2,348 4,687 11,262 provision EBITDA 11,811 16,094 36,426 58,587 Costs on 400 - 2,245 - exited brands Costs of streamlining and consolidation 715 - 2,176 - of operations, and other strategic initiatives Costs of voluntary - - 2,420 - retirement Gain on asset (410 ) - (410 ) - sales EBITDA, as $ 12,516 $ 16,094 $ 42,857 $ 58,587 adjusted Gross profit $ 75,795 $ 82,450 $ 232,860 $ 251,688 Less: Selling, general and (63,984 ) (66,356 ) (196,434 ) (193,101 ) administrative expenses Plus: Costs on 400 - 2,245 - exited brands Costs of streamlining and consolidation 715 - 2,176 - of operations, and other strategic initiatives Costs of voluntary - - 2,420 - retirement Gain on asset (410 ) - (410 ) - sales EBITDA, as 12,516 16,094 42,857 58,587 adjusted Total revenues $ 236,248 $ 248,420 $ 711,208 $ 751,144 EBITDA margin percentage of 5.3 % 6.5 % 6.0 % 7.8 % revenues Adjusted EBITDA consists of (loss) earnings before interest, taxes, depreciation, amortization, costs on early extinguishment of debt, costs on exited brands, costs of streamlining and consolidation of operations, and other strategic initiatives, as well as, costs associated with voluntary retirements and the gain on sale of assets. Adjusted EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of (1) America, and does not represent cash flow from operations. Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. In addition, we present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across periods on a consistent basis by excluding items that we do not believe are indicators of our core operating performance. Contact: Perry Ellis International, Inc. Anita Britt, 305-873-1210
Perry Ellis International Reports Third Quarter Fiscal 2013 Results
Press spacebar to pause and continue. Press esc to stop.