Maidenform Brands, Inc. Reports 2012 Results and Provides Guidance for 2013 PR Newswire ISELIN, N.J., March 6, 2013 ISELIN, N.J., March 6, 2013 /PRNewswire/ -- Maidenform Brands, Inc. (NYSE: MFB), a global branded marketer of intimate apparel, today reported fourth quarter 2012 net sales of $135.1 million, an increase of 8.5% over the fourth quarter of 2011. Full year 2012 sales totaled $600.3 million, a decrease of 1.0% when compared to fiscal 2011. Reported EPS was $0.24 for the fourth quarter of 2012 compared to a reported loss per share of $(0.13) for the fourth quarter of 2011. For the full year, reported EPS was $1.43 for 2012 compared to $1.42 for 2011. Reported 2012 results included $0.08 of EPS from a non-recurring state income tax benefit and a charge of $(0.06) relating to exiting the Maidenform's Charmed brand and a workforce reduction (see Exhibit 2 to this press release for further details). 2012 EPS excluding these items was $0.22 for the fourth quarter and $1.41 for the full year. Reported 2011 EPS includes charges in the fourth quarter and full year of $0.13 per share and $0.31 per share, respectively, relating to a litigation settlement, discontinuation of a product line and a workforce reduction (see Exhibit 2 to this press release for further details). 2011 EPS excluding these items was $0.00 for the fourth quarter and $1.73 for the full year. "We met our fourth quarter expectations in sales and earnings, but 2012 was a disappointing year overall, with weak category, customer and consumer trends in our key markets, and increased shapewear competition in department and chain stores," stated Maurice Reznik, Chief Executive Officer. "2013 will be a transition year for us as we take additional and more substantial steps to invest in our iconic brand, processes and infrastructure. Additionally, we will be pruning underperforming businesses and slow moving products, while improving gross margins and carefully investing in infrastructure. The goal of these actions is to return Maidenform to sustained long-term growth with top line increases in the mid-single digits and EPS growth of 10% or better starting in 2014. While we focus on these actions, we will continue to introduce new and innovative products. In 2013, we are excited to expand upon our Comfort Devotion collection and, in the fourth quarter, launch a new full figure collection at department and chain stores," concluded Mr. Reznik. Financial Results for Fourth Quarter 2012 versus Fourth Quarter 2011 Net sales for the fourth quarter of 2012 increased $10.6 million, or 8.5%, to $135.1 million. Wholesale segment net sales for the fourth quarter of 2012 increased $11.0 million, or 10.0%, to $120.8 million. Retail segment net sales decreased $0.4 million, or 2.7%, to $14.3 million. The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release. Wholesale Segment Department Stores and National Chain Stores Net sales for the department stores and national chain stores channel increased $2.0 million, or 3.9%, to $53.9 million for the fourth quarter of 2012. This increase was led by growth in the bra and pants categories, which included the introduction of the Company's Comfort Devotion collection that shipped for the first time in the fourth quarter of 2012. Partially offsetting these increases were sales declines in the shapewear category from increased competition along with a sales decline at a mid-tier department store as it transitions to a new pricing and merchandising strategy. Mass Merchants Mass merchant channel net sales increased $2.4 million, or 6.6%, to $38.7 million for the fourth quarter of 2012, resulting from increased shipments to most customers that were partially offset by lower sales to a warehouse club. Other Net sales in the other channel increased $6.6 million, or 30.6%, to $28.2 million for the fourth quarter of 2012 from increased program sales to off-price retailers that more than offset sales declines to a private label customer. Total international net sales, which are included in the wholesale segment, decreased $1.3 million, or 9.1%, to $13.0 million. This sales decline was driven by Canada, Germany, and the Benelux countries, which more than offset sales increases in smaller markets such as Brazil. Retail Segment Total retail segment net sales decreased $0.4 million, or 2.7%, to $14.3 million. Same store sales, defined as outlet stores that have been open for more than one year, decreased 5.9% due to reduced customer traffic. Internet sales increased $0.4 million, or 23.5%, to $2.1 million for the fourth quarter of 2012. The retail segment operated 77 outlet stores as of the end of fiscal 2012 and 74 outlet stores as of the end of fiscal 2011. Consolidated gross profit increased $11.1 million, or 38.0%, to $40.3 million for the fourth quarter of 2012. As a percentage of net sales, consolidated gross margins were 29.8% for the fourth quarter of 2012 versus 23.5% for the fourth quarter of 2011. The improvement in gross margin over the prior year was a result of the discontinuation of a product line that did not repeat in the current year. Additionally, the Company had lower inventory related clearing costs and lower liquidation sales to off-price retailers. Included in the fourth quarter 2012 results are markdowns associated with exiting the Maidenform's Charmed brand. Consolidated selling, general and administrative expenses (SG&A) increased $0.5 million, or 1.5%, to $34.6 million for the fourth quarter of 2012. As a percentage of net sales, SG&A decreased to 25.6% for the fourth quarter of 2012 compared to 27.4% for the fourth quarter of 2011. The results in the fourth quarter of 2012 and 2011 include severance expense of $1.5 million and $1.2 million, respectively, related to corporate workforce reductions and, in 2012, store personnel reductions due to planned store closings of 10 stores in the first quarter of 2013. Net interest expense for the fourth quarter of 2012 was unchanged at $0.3 million compared to the fourth quarter of 2011. The Company's effective income tax rate for the fourth quarter of 2012 was (0.3)% compared to 40.5% for the fourth quarter of 2011. The lower effective income tax rate in the fourth quarter of 2012 was primarily due to a non-recurring state income tax benefit. Net income (loss) for the fourth quarter of 2012 and 2011 was $5.5 million and $(3.1) million, respectively, and EPS was $0.24 and loss per share of $(0.13), respectively. Excluding the items mentioned in paragraphs 2 and 3 above and detailed in Exhibit 2 to this press release, adjusted fourth quarter EPS was $0.22 in 2012 and $0.00 in 2011. Financial Results for Fiscal 2012 versus Fiscal 2011 Net sales for 2012 decreased $6.0 million, or 1.0%, to $600.3 million. Wholesale segment net sales for 2012 decreased $7.3 million, or 1.3%, to $538.5 million. Department stores and national chain stores net sales increased $1.9 million, or 0.8%, to $247.1 million for 2012. This increase was led by growth in the bra and pant categories, which included the introduction of the Comfort Devotion collection and a private label brand that shipped for the first time during 2012. Partially offsetting this increase was an assortment expansion in 2011 at one of the Company's chain store customers that did not repeat in 2012, a sales decline at a mid-tier department store customer as it transitions to a new pricing and merchandising strategy and sales declines in the shapewear category from increased competition. The Company's mass merchant channel net sales decreased $5.5 million, or 2.8%, to $190.7 million from varying results with our mass merchant customers. Some of the factors that drove this decrease were decreased doors at retail and program sales that did not repeat in 2012. Partially offsetting this decrease was a strong performance in full figure and shapewear sales at one of our mass customers. The other channel decreased $3.7 million, or 3.5%, to $100.7 million due to lower sales to a specialty retailer that was partially offset by increased program sales to off-price retailers. Total international net sales increased $2.5 million, or 4.3%, to $60.9 million, driven by growth in major markets, such as Canada, the United Kingdom and Mexico. Partially offsetting these increases were sales decreases in other major markets, such as the Benelux countries, Sweden and Germany, including the impact of unfavorable currency exchange rates on sales. Retail segment net sales for 2012 increased $1.3 million, or 2.1%, to $61.8 million. Same store sales for Maidenform's retail outlet stores decreased 1.2%. Internet sales increased $2.3 million, or 34.3%, to $9.0 million, resulting primarily from promotional events that more than offset the sales declines at our stores. The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release. Consolidated gross margins for 2012 were 30.9% versus 31.6% for the same period in 2011. Changes in channel and product mix favorably impacted gross margin but were more than offset by unfavorable off-price retailer activity to drive inventory productivity, additional promotional activities and inventory related clearing costs. Included in 2012 results are markdowns associated with exiting the Maidenform's Charmed brand. Included in the 2011 results was the discontinuation of a product line that did not repeat in the current year. Consolidated SG&A increased $1.1 million, or 0.8%, to $133.2 million for 2012. As a percentage of net sales, SG&A increased to 22.2% for 2012 compared to 21.8% for the same period of 2011. In fiscal 2012 and 2011, the Company recorded severance expense of $1.5 million and $1.2 million, respectively, related to workforce reductions mentioned above. The remaining increase was due to increased payroll and related benefits, including medical benefits, and retail operating expenses.Partially offsetting these increases was a reduction in incentive compensation, professional fees and the benefit of favorable currency exchange rates. The Company's effective income tax rate for fiscal 2012 was 34.7% compared to 35.6% for the same period of 2011. The lower effective rate for 2012 is primarily from a non-recurring state income tax benefit recorded in the fourth quarter of 2012. The effective rate for 2011 included discrete items recorded during the year such as the utilization of research and development credits and non-recurring state income tax benefits, including the impact of the New Jersey tax law change enacted in the second quarter of 2011. Net income for fiscal 2012 and 2011 was $33.5 million and $33.2 million, respectively, and EPS was $1.43 and $1.42, respectively. Excluding the items mentioned in paragraphs 2 and 3 above and detailed in Exhibit 2 to this press release, EPS for fiscal 2012 was $1.41 and for fiscal 2011 EPS was $1.73. Total cash and cash equivalents as of December 29, 2012 were $83.7 million compared to $68.0 million as of December 31, 2011. The Company's outstanding debt was $68.2 million as of December 29, 2012 versus $69.1 million as of December 31, 2011. During fiscal 2012, we returned approximately $6.5 million to shareholders through share repurchases. Financial Performance Guidance for 2013: 2013 First Quarter: oThe Company's first quarter outlook includes a sales decline of approximately $20 million compared to 2012, as a result of non-recurring warehouse club and private label business. During the quarter, the Company also expects to increase promotional spending to clear unproductive inventory. oAccordingly, total Company net sales are estimated to decline in the teens percentage range versus the first quarter of 2012. oThe Company projects a first quarter loss per share in a range of $0.05 to $0.10. 2013 Full Year Outlook: oTotal Company net sales in a range of $575 million to $595 million. oFull year EPS in a range of $1.20 to $1.30 per share. Conference Call Information Maidenform will host a conference call and webcast on Wednesday, March 6, 2013 at 8:30 am ET to discuss its fourth quarter and full year 2012 results, in addition to providing an update on its business. The conference call telephone number is (866) 578-5784 and the passcode is "Maidenform." The conference call will be simultaneously webcasted and can be accessed via the investor relations page of Maidenform's website at www.maidenformbrands.com. A dial-in replay of this event will be available through March 20, 2013 and will be hosted on the Company's website for a limited time. The replay telephone numbers are (888) 286-8010 or (617) 801-6888. The replay passcode is 20624257. About Maidenform Brands, Inc. Maidenform Brands, Inc. is a global intimate apparel company with a portfolio of established, well-known brands, top-selling products and an iconic heritage. Maidenform designs, sources and markets an extensive range of intimate apparel products, including bras, panties and shapewear. During its 91-year history, Maidenform has built strong equity for its brands and established a platform for growth through a combination of innovative, first-to-market designs and creative advertising campaigns focused on increasing brand awareness with generations of women. Maidenform sells its products under some of the most recognized brands in the intimate apparel industry, including Maidenform^®, Control It!^®, Fat Free Dressing^®, Flexees^®, Lilyette^®, Bodymates^®, Inspirations^®, Self Expressions^® and Sweet Nothings^®. Maidenform products are currently distributed in approximately 63 countries and territories outside the United States. Forward Looking Statement: This press release contains forward-looking statements relating to future events and the Company's future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects" or similar words or phrases, although not all forward-looking statements contain such identifying words. All forward-looking statements included in this press release are based on information available to the Company on the date hereof. It is routine for the Company's internal projections and expectations to change as the year or each quarter in the year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of each quarter or the year. Although these expectations may change, we assume no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Actual events or results may differ materially from those contained in the projections or forward-looking statements. The following factors, among others, could cause the Company's actual results to differ materially from those expressed in any forward-looking statements: the worldwide apparel industry may continue to be harmed by the current global economic downturn, the conditions in the financial and credit markets may affect the availability and cost of our funding, the Company's growth cannot be assured and any growth may be unprofitable; potential fluctuations in our results of operations or rate of growth; our dependence on a limited number of customers; the Company has larger competitors with greater resources; retail trends in the intimate apparel industry, including consolidation and continued growth in the development of private brands, resulting in downward pressure on prices, reduced floor space and other harmful changes; failure to anticipate, identify or promptly react to changing trends, styles, or consumer preferences; the Company's credit agreement could limit growth opportunities; external events that disrupt the Company's supply chain, result in increased cost of goods or an inability to deliver its products; events which result in difficulty in procuring or producing products on a cost-effective basis; disputes with third parties for infringement or misappropriation of their proprietary rights; increases in the prices of raw materials; changing international trade regulation, including as it relates to the imposition or elimination of quotas on imports of textiles and apparel; foreign currency exposure; and the sufficiency of cash to fund operations and capital expenditures. This list is intended to identify only certain of the principal factors that could cause actual results to differ from those discussed in the forward-looking statements. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (unaudited) December 29, December 31, 2012 2011 Assets Current assets Cash and cash equivalents $ $ 83,747 68,041 Accounts receivable, net 72,538 54,517 Inventories 119,015 113,200 Deferred income taxes 15,081 15,357 Prepaid expenses and other current assets 15,089 14,310 Total current assets 305,470 265,425 Property and equipment, net 31,347 29,497 Goodwill 7,162 7,162 Intangible assets, net 91,789 92,765 Other non-current assets 183 386 Total assets $ $ 435,951 395,235 Liabilities and stockholders' equity Current liabilities Current portion of long-term debt $ $ 1,100 1,100 Accounts payable 53,050 38,425 Accrued expenses and other current 21,882 24,967 liabilities Total current liabilities 76,032 64,492 Long-term debt 67,125 67,950 Deferred income taxes 26,927 25,108 Other non-current liabilities 11,583 14,497 Total liabilities 181,667 172,047 Stockholders' equity Preferred stock - $0.01 par value; 10,000,000 shares authorized and none issued and outstanding - - Common stock - $0.01 par value; 100,000,000 shares authorized; 24,399,732 shares issued and 22,754,212 outstanding at December 29, 2012 and 24,399,732 shares issued and 22,922,969 244 244 outstanding at December 31, 2011 Additional paid-in 80,628 78,362 capital Retained earnings 213,423 181,227 Accumulated other comprehensive loss (8,647) (8,301) Treasury stock, at cost (1,645,520 shares at December 29, 2012 and 1,476,763 shares at December 31, 2011) (31,364) (28,344) Total stockholders' equity 254,284 223,188 Total liabilities and stockholders' equity $ $ 435,951 395,235 MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share and per share amounts) (unaudited) Three Months Ended For the Years Ended December 29, December 31, December 29, December 31, 2012 2011 2012 2011 Net sales $ $ $ $ 135,124 124,516 600,277 606,327 Cost of sales 94,829 95,313 414,796 414,900 Gross 40,295 29,203 185,481 191,427 profit Selling, general and administrative 34,576 34,091 133,193 132,202 expenses Litigation settlement - - - 6,750 Operating 5,719 (4,888) 52,288 52,475 income (loss) Interest expense, net 246 280 1,086 969 Income (loss) before provision for income taxes 5,473 (5,168) 51,202 51,506 Income tax (benefit) (18) (2,093) 17,743 18,314 expense Net income $ $ $ $ (loss) 5,491 (3,075) 33,459 33,192 Basic earnings (loss) $ $ $ $ per common share 0.24 (0.13) 1.45 1.45 Diluted earnings $ $ $ $ (loss) per common 0.24 (0.13) 1.43 1.42 share Basic weighted average number of shares 22,965,262 22,918,027 23,012,012 22,855,196 outstanding Diluted weighted average number of shares 23,306,812 22,918,027 23,388,482 23,332,405 outstanding MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended For the Years Ended December 29, December 31, December 29, December 31, 2012 2011 2012 2011 Net income (loss) $ $ $ $ 5,491 (3,075) 33,459 33,192 Other comprehensive loss, before tax: Foreign currency 292 (441) 430 (641) translation adjustments Adjustments to benefit (1,494) (5,787) (1,083) (5,618) plans Other comprehensive (1,202) (6,228) (653) (6,259) loss, before tax Income tax benefit related to items of other comprehensive (471) (2,244) (307) (2,176) loss (1) Other comprehensive (731) (3,984) (346) (4,083) loss, net of tax Comprehensive income $ $ $ $ (loss) 4,760 (7,059) 33,113 29,109 (1) Tax benefit provided relates to benefit plan deferrals. MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the Years Ended December 29, December 31, 2012 2011 Cash flows from operating activities Net income $ $ 33,459 33,192 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 5,351 4,706 Amortization of intangible assets 1,101 1,090 Amortization of deferred financing 181 178 costs Stock-based compensation 4,876 4,048 Deferred income taxes 1,702 1,317 Excess tax benefits related to (896) (1,075) stock-based compensation Bad debt expense (56) 47 Other non-cash items 245 43 Net changes in operating assets and liabilities Accounts receivable (17,633) (13,754) Inventories (5,210) (24,753) Prepaid expenses and other current and non-current assets 2,053 (3,525) Accounts payable 14,595 7,779 Accrued expenses and other current and non-current liabilities (3,852) (2,004) Income taxes payable (4,198) (2,927) Net cash provided by operating 31,718 4,362 activities Cash flows from investing activities Capital expenditures (7,307) (8,585) Net cash used in investing (7,307) (8,585) activities Cash flows from financing activities Term loan repayments (825) (1,100) Payments of capital lease obligations (306) (283) Purchase of common stock for treasury (6,534) (1,961) Financing fees paid (250) - Proceeds from stock options exercised 672 1,545 Excess tax benefits related to stock-based 896 1,075 compensation Payments of employee withholding taxes related to equity awards (1,755) (1,288) Net cash used in financing (8,102) (2,012) activities Effects of exchange rate changes on cash and (603) 1,055 cash equivalents Net increase (decrease) in 15,706 (5,180) cash and cash equivalents Cash and cash equivalents Beginning of the year 68,041 73,221 End of the year $ $ 83,747 68,041 Supplementary disclosure of cash flow information Cash paid during the year Interest $ $ 914 973 Income taxes $ $ 19,828 19,331 Supplemental schedule of non-cash financing activities Treasury stock issued related to equity award $ $ activity 5,269 5,001 Exhibit 1 MAIDENFORM BRANDS, INC. AND SUBSIDIARIES SALES BY CHANNEL OF DISTRIBUTION AND PRODUCT MIX (in millions) (unaudited) Three Months Ended December 29, December 31, $ % 2012 2011 change change Department stores and national chain $ $ $ 3.9% stores 53.9 51.9 2.0 Mass merchants 38.7 36.3 2.4 6.6 Other 28.2 21.6 6.6 30.6 Total wholesale 120.8 109.8 11.0 10.0 Retail 14.3 14.7 (0.4) (2.7) Total consolidated $ $ $ 8.5% net sales 135.1 124.5 10.6 For the Years Ended December 29, December 31, $ % 2012 2011 change change Department stores and national chain $ $ $ 0.8% stores 247.1 245.2 1.9 Mass merchants 190.7 196.2 (5.5) (2.8) Other 100.7 104.4 (3.7) (3.5) Total wholesale 538.5 545.8 (7.3) (1.3) Retail 61.8 60.5 1.3 2.1 Total consolidated $ $ $ -1.0% net sales 600.3 606.3 (6.0) Three Months Ended For the Years Ended December 29, December 31, December 29, December 31, 2012 2011 2012 2011 Bras 58% 49% 57% 55% Shapewear 33 44 35 38 Panties 9 7 8 7 100% 100% 100% 100% Exhibit 2 MAIDENFORM BRANDS, INC. AND SUBSIDIARIES DILUTED EARNINGS PER SHARE GAAP TO NON-GAAP RECONCILIATION SCHEDULE (unaudited) The Company's non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses and other specified items that due to their significant and/or unusual nature are evaluated on an individual basis. Similar charges or gains for some of these items have been recognized in prior periods and it is reasonably possible that they could reoccur in future periods. Non-GAAP information is intended to portray the results of the Company's baseline performance and to enhance an investor's overall understanding of the Company's past financial performance and prospects for the future. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP. Specific items were as follows: Three Months Ended For the Years Ended December December December December 29, 31, 29, 31, 2012 2011 2012 2011 (in millions) Markdowns associated $ with exiting the $ $ $ Maidenform's Charmed 0.9 - 0.9 - brand Discontinuation of a - 3.8 - 3.8 product line Gross profit 0.9 3.8 0.9 3.8 Workforce reduction 1.5 1.2 1.5 1.2 Selling, general and 1.5 1.2 1.5 1.2 administrative expenses Litigation settlement - - - 6.8 Litigation settlement - - - 6.8 Increase to income before 2.4 5.0 2.4 11.8 provision for income taxes Income tax on items (0.9) (1.9) (0.9) (4.6) above Non-recurring state (1.9) - (1.9) - income tax benefit (Decrease)/increase to net $ $ $ $ income (0.4) 3.1 (0.4) 7.2 The reconciliations from GAAP to Non-GAAP were as follows: Three Months Ended For the Years Ended December December December December 29, 31, 29, 31, 2012 2011 2012 2011 (in millions) $ $ $ $ Net income (loss) - GAAP 5.5 (3.1) 33.5 33.2 Specific items above (0.4) 3.1 (0.4) 7.2 $ $ $ $ Net income - Non-GAAP 5.1 - 33.1 40.4 Three Months Ended For the Years Ended December December December December 29, 31, 29, 31, 2012 2011 2012 2011 Reported diluted earnings $ $ $ $ (loss) per share 0.24 (0.13) 1.43 1.42 Adjustments: Non-recurring state (0.08) - (0.08) - income tax benefit Workforce reduction 0.04 0.03 0.04 0.03 Markdowns associated with exiting the 0.02 - 0.02 - Maidenform's Charmed brand Discontinuation of a - 0.10 - 0.10 product line Litigation settlement - - - 0.18 Non-GAAP diluted earnings $ $ $ $ per share 0.22 - 1.41 1.73 SOURCE Maidenform Brands, Inc. Website: http://www.maidenformbrands.com Contact: Chris Vieth, Chief Operating Officer & Chief Financial Officer, +1-732-621-2101, email@example.com
Maidenform Brands, Inc. Reports 2012 Results and Provides Guidance for 2013
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