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Section 1: 8-K (FORM 8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 25, 2018

  

DECKERS OUTDOOR CORPORATION

 

(Exact name of registrant as specified in its charter)

 

Delaware

 

(State or other jurisdiction of incorporation)

 

001-36436   95-3015862
(Commission File Number)   (IRS Employer Identification No.)
     
250 Coromar Drive, Goleta, California   93117
(Address of principal executive offices)   (Zip code)

 

Registrant’s telephone number, including area code (805) 967-7611

 

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

  

  

Item 2.02.Results of Operations and Financial Condition.

 

On October 25, 2018, Deckers Outdoor Corporation (the “Company”) issued a press release announcing its financial results for the three months ended September 30, 2018 and updating its guidance for full fiscal year 2019. The Company also held a conference call regarding the financial results and updated guidance. A copy of the press release is furnished hereto as Exhibit 99.1.

 

The information in this Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

  

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

Exhibit No. Description
      99.1 Press Release, dated October 25, 2018

 

 

  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: October 25, 2018   Deckers Outdoor Corporation  
       
      /s/ Steven J. Fasching  
   

Steven J. Fasching

 
      Chief Financial Officer  

 

 

  

 

EXHIBIT INDEX

 

Exhibit No. Description
   
99.1 Press Release, dated October 25, 2018

  

 

 

 

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

Deckers Brands Reports Second Quarter Fiscal 2019 Financial Results And Raises Guidance For Full Year Fiscal 2019

GOLETA, Calif., Oct. 25, 2018 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, today announced financial results for the second fiscal quarter ended September 30, 2018. The Company also provided its financial outlook for the third fiscal quarter ending December 31, 2018 and updated its outlook for the full fiscal year ending March 31, 2019.

Throughout this release, references to Non-GAAP financial measures exclude the impact of certain charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring charges. Additional information regarding these Non-GAAP financial measures is set forth under the heading "Non-GAAP Financial Measures" below.

"The continued profitability gains in the UGG brand and top-line growth within the HOKA ONE ONE brand drove second quarter results, as both sales and earnings per share exceeded expectations," said Dave Powers, President and Chief Executive Officer. "Profitability in the second quarter was aided by a 350 basis point increase in gross margin over last year. While a portion of the increase in gross margin came from one-time savings in the quarter, the Company continues to execute well on our long-term plan of improving levels of profitability. Additionally, our confidence in our strategy, the momentum we see in the business and the strength of the brand portfolio has led us to raise our fiscal year 2019 guidance."

Second Quarter Fiscal 2019 Financial Review

Brand Summary

Channel Summary (included in the brand sales numbers above)

Geographic Summary (included in the brand and channel sales numbers above)

Balance Sheet (September 30, 2018 as compared to September 30, 2017)

Stock Repurchase Program

During the second quarter, the Company repurchased approximately 1.1 million shares of its common stock for a total of $125 million. As of September 30, 2018, the Company had $116 million remaining under its $400 million in stock repurchase authorizations.

Full Year Fiscal 2019 Outlook for the Twelve Month Period Ending March 31, 2019

Third Quarter Fiscal 2019 Outlook for the Three Month Period Ending December 31, 2018

Non-GAAP Financial Measures

We present certain Non-GAAP financial measures in this press release, including constant currency, Non-GAAP SG&A expenses, Non-GAAP operating income and Non-GAAP diluted earnings (loss) per share, to provide information that may assist investors in understanding our financial results and assessing our prospects for future performance. We believe these Non-GAAP financial measures are important indicators of our operating performance because they exclude items that are unrelated to, and may not be indicative of, our core operating results, such as charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring charges. In particular, we believe the exclusion of certain costs and charges allows for a more meaningful comparison of our results from period to period. These Non-GAAP measures, as we calculate them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers. For example, in order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements in the condensed consolidated balance sheets. These Non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent we utilize such Non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period. A reconciliation of each of the Non-GAAP financial measures to the most directly comparable GAAP measures has been provided under the heading "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" in the financial statement tables attached to this press release.

Conference Call Information

The Company's conference call to review the results for the second quarter fiscal 2019 will be broadcast live today, Thursday, October 25, 2018 at 4:30 pm Eastern Time and hosted at www.deckers.com. You can access the broadcast by clicking on the "Investor" tab and then clicking on the microphone icon at the top of the page.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has over 40 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally. For more information, please visit www.deckers.com.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our anticipated financial performance, including our projected net sales, margins, expenses, effective tax rate and earnings (loss) per share, as well as statements regarding our progress towards the achievement of our long term strategic objectives, our ability to compete in our industry, our product and brand positioning and strategies, and our potential repurchase of shares. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expected," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions.

Forward-looking statements represent our management's current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as well as in our other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30,


Six Months Ended September 30,


2018


2017


2018


2017

Net sales

$

501,913



$

482,460



$

752,507



$

692,177


Cost of sales

250,026



257,343



385,655



376,435


Gross profit

251,887



225,117



366,852



315,742


Selling, general and administrative expenses

161,475



157,762



315,854



304,643


Income from operations

90,412



67,355



50,998



11,099










Other expense, net

637



1,034



274



1,365


Income before income taxes

89,775



66,321



50,724



9,734


Income tax expense

15,403



16,762



6,759



2,296


Net income

74,372



49,559



43,965



7,438


Other comprehensive (loss) income, net of tax








Unrealized (loss) gain on foreign currency exchange rate hedges

(1,197)



(911)



4,126



(4,683)


Foreign currency translation (loss) gain

(3,861)



2,968



(11,324)



4,518


Total other comprehensive (loss) income

(5,058)



2,057



(7,198)



(165)


Comprehensive income

$

69,314



$

51,616



$

36,767



$

7,273










Net income per share








Basic

$

2.49



$

1.55



$

1.46



$

0.23


Diluted

$

2.48



$

1.54



$

1.45



$

0.23


Weighted-average common shares outstanding








Basic

29,849



32,015



30,134



32,003


Diluted

30,028



32,272



30,327



32,256


DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)






September 30, 2018


March 31, 2018

ASSETS

(UNAUDITED)



Current assets




Cash and cash equivalents

$

182,192



$

429,970


Trade accounts receivable, net

321,784



143,704


Inventories, net

514,927



299,602


Other current assets

59,562



37,414


Total current assets

1,078,465



910,690






Property and equipment, net

215,720



220,162


Other noncurrent assets

129,783



133,527


Total assets

$

1,423,968



$

1,264,379


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Short-term borrowings

$

71,473



$

578


Trade accounts payable

277,577



93,939


Other current liabilities

99,167



94,649


Total current liabilities

448,217



189,166






Mortgage payable

31,210



31,504


Other long-term liabilities

97,754



102,930


Total long-term liabilities

128,964



134,434






Total stockholders' equity

846,787



940,779


Total liabilities and stockholders' equity

$

1,423,968



$

1,264,379


DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30, 2018






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items)
(2) (3)

Net sales

$

501,913





$

501,913


Cost of sales

250,026





250,026


Gross profit

251,887





251,887


Selling, general and administrative expenses

161,475



(295)


161,180


Income from operations

90,412



295


90,707








Other expense (income), net

637



(445)


192


Income before income taxes

89,775



740


90,515


Income tax expense

15,403





19,008


Net income

$

74,372





$

71,507








Net income per share






Basic

$

2.49





$

2.40


Diluted

$

2.48





$

2.38


Weighted-average common shares outstanding






Basic

29,849





29,849


Diluted

30,028





30,028




(1)

 Amounts as of September 30, 2018 reflect charges related to restructuring costs, other charges related to organizational changes and charges in connection with the Company's refinancing of its prior credit facility.

(2)

The effective tax rate for the GAAP measures is 17.2% and the tax rate applied to the Non-GAAP measures is 21% for the three months ended September 30, 2018, which represents our expected effective tax rate for fiscal year 2019.

(3)

Figures may not sum due to rounding.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Three Months Ended September 30, 2017






Non-GAAP


GAAP Measures




Measures


(As Reported)


Other Charges (1)


(Excluding Items) (2)

Net sales

$

482,460





$

482,460


Cost of sales

257,343





257,343


Gross profit

225,117





225,117


Selling, general and administrative expenses

157,762



(464)


157,298


Income from operations

67,355



464


67,819








Other expense, net

1,034




1,034


Income before income taxes

66,321



464


66,785


Income tax expense

16,762





17,084


Net income

$

49,559





$

49,701








Net income per share






Basic

$

1.55





$

1.55


Diluted

$

1.54





$

1.54


Weighted-average common shares outstanding






Basic

32,015





32,015


Diluted

32,272





32,272




(1)

Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.

(2)

The tax rate applied to the Non-GAAP measures is 25.6% for the three months ended September 30, 2017.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Six Months Ended September 30, 2018






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items)

(2) (3)

Net sales

$

752,507





$

752,507


Cost of sales

385,655





385,655


Gross profit

366,852





366,852


Selling, general and administrative expenses

315,854



(818)


315,037


Income from operations

50,998



818


51,816








Other expense (income), net

274



(445)


(171)


Income before income taxes

50,724



1,263


51,986


Income tax expense

6,759





10,345


Net income

$

43,965





$

41,641








Net income per share






Basic

$

1.46





$

1.38


Diluted

$

1.45





$

1.37


Weighted-average common shares outstanding






Basic

30,134





30,134


Diluted

30,327





30,327




(1)

Amounts as of September 30, 2018 reflect charges related to restructuring costs, other charges related to organizational changes and charges in connection with the Company's refinancing of its prior credit facility.

(2)

The effective tax rate for the GAAP measures is 13.3% and the tax rate applied to the Non-GAAP measures is 19.9% for the six months ended September 30, 2018. The 19.9% Non-GAAP tax rate is calculated using the blended Non-GAAP tax rates for the three months ended June 30, 2018 and September 30, 2018, respectively.

(3)

Figures may not sum due to rounding.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)



Six Months Ended September 30, 2017






Non-GAAP


GAAP Measures


Restructuring and


Measures


(As Reported)


Other Charges (1)


(Excluding Items) (2)

Net sales

$

692,177





$

692,177


Cost of sales

376,435





376,435


Gross profit

315,742





315,742


Selling, general and administrative expenses

304,643



(2,408)


302,235


Income from operations

11,099



2,408


13,507








Other expense, net

1,365




1,365


Income before income taxes

9,734



2,408


12,142


Income tax expense

2,296





3,357


Net income

$

7,438





$

8,785








Net income per share






Basic

$

0.23





$

0.27


Diluted

$

0.23





$

0.27


Weighted-average common shares outstanding






Basic

32,003





32,003


Diluted

32,256





32,256




(1)

Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.

(2)

The tax rate applied to the Non-GAAP measures is 27.6% for the six months ended September 30, 2017.



CONTACT: Erinn Kohler | Director, Investor Relations & Corporate Planning | Deckers Brands | 805.967.7611

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