Carter's, Inc. Reports First Quarter Fiscal 2014 Results
-
Net Sales
$652 Million , Up 10% - Total U.S. Direct-to-Consumer Sales: Carter's +11%, OshKosh +15%
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EPS
$0.63 , Down 8%; Adjusted EPS$0.73 , Down 8%
“Despite the severe winter weather earlier this year, we continued to see strong demand for our brands and achieved a record level of first quarter sales. We believe consumers are responding to the strength and compelling value of our Spring product offerings,” said Michael D. Casey, Chairman and Chief Executive Officer. “Our sales growth in the first quarter was driven by our Carter’s brand with strong performance in both our wholesale and retail businesses. As expected, earnings were affected by higher product costs and investments to support our growth strategies. We’re forecasting good growth in sales and earnings, and expect to achieve our growth objectives this year.”
First Quarter of Fiscal 2014 compared to First Quarter of Fiscal 2013
Consolidated net sales increased
Operating income in the first quarter of fiscal 2014 decreased
First quarter fiscal 2014 operating income includes net expenses
totaling
Excluding the net expenses noted above in both periods, adjusted
operating income in the first quarter of fiscal 2014 decreased
Net income in the first quarter of fiscal 2014 decreased
Cash flow from operations in the first quarter of fiscal 2014 was
Business Segment Results
Carter’s Segments
Carter’s retail segment sales increased
In the first quarter of fiscal 2014, the Company opened 16 Carter’s
retail stores in
Carter’s wholesale segment sales increased
OshKosh B’gosh Segments
OshKosh retail segment sales increased
In the first quarter of fiscal 2014, the Company opened six OshKosh
retail stores in
OshKosh wholesale segment sales decreased
International Segment
International segment sales increased
Canadian comparable retail store sales declined 10.2%, or approximately
Dividends
In the first quarter of fiscal 2014, the Company's Board of Directors
authorized a 19% increase (
Stock Repurchase Activity
Accelerated Stock Repurchase Agreements
As previously disclosed, the Company entered into accelerated stock
repurchase ("ASR") agreements of
Open Market Purchases
During the first quarter of fiscal 2014, the Company repurchased 30,151
shares of its common stock for
As of
2014 Business Outlook
For the second quarter of fiscal 2014, the Company projects net sales to
increase approximately 8% to 10% over the second quarter of fiscal 2013
and adjusted diluted earnings per share to be approximately comparable
to adjusted diluted earnings per share of
For fiscal 2014, the Company projects net sales to increase
approximately 8% to 10% over fiscal 2013 and adjusted diluted earnings
per share to increase approximately 12% to 15% compared to adjusted
diluted earnings per share of
Conference Call
The Company will hold a conference call with investors to discuss first
quarter fiscal 2014 results and its business outlook on
About
Cautionary Language
This press release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 relating to the Company's future
performance, including, without limitation, statements with respect to
the Company's anticipated financial results for the second quarter of
fiscal 2014 and fiscal year 2014, or any other future period, assessment
of the Company's performance and financial position, and drivers of the
Company's sales and earnings growth. Such statements are based on
current expectations only, and are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated, or projected. Factors that could cause actual results to
materially differ include the risks of: losing one or more major
customers or vendors or financial difficulties for one or more of our
major customers or vendors; the Company's products not being accepted in
the marketplace; changes in consumer preference and fashion trends;
negative publicity; the Company failing to protect its intellectual
property; the breach of the Company's consumer databases, systems or
processes; incurring costs in connection with cooperating with
regulatory investigations and proceedings; increased leverage, not being
able to repay its indebtedness and being subject to restrictions on
operations by the Company's debt agreements; increased production costs;
deflationary pricing pressures; decreases in the overall level of
consumer spending; disruptions resulting from the Company's dependence
on foreign supply sources; the Company's foreign supply sources not
meeting the Company's quality standards or regulatory requirements;
disruptions in the Company's supply chain, including distribution
centers or in-sourcing capabilities or otherwise, including the risk of
slow-downs, disruptions or strikes in the event that a new agreement
between the port through which we source substantially all of our
products and
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CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except for share data) (unaudited) |
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| Fiscal quarter ended | ||||||||||
|
March 29, 2014 |
March 30, 2013 |
|||||||||
| Net sales | $ | 651,643 | $ | 591,009 | ||||||
| Cost of goods sold | 389,918 | 347,947 | ||||||||
| Gross profit | 261,725 | 243,062 | ||||||||
| Selling, general, and administrative expenses | 210,095 | 185,361 | ||||||||
| Royalty income | (9,901 | ) | (9,242 | ) | ||||||
| Operating income | 61,531 | 66,943 | ||||||||
| Interest expense | 6,897 | 1,294 | ||||||||
| Interest income | (132 | ) | (191 | ) | ||||||
| Other expense, net | 596 | 573 | ||||||||
| Income before income taxes | 54,170 | 65,267 | ||||||||
| Provision for income taxes | 19,873 | 23,852 | ||||||||
| Net income | $ | 34,297 | $ | 41,415 | ||||||
| Basic net income per common share | $ | 0.64 | $ | 0.70 | ||||||
| Diluted net income per common share | $ | 0.63 | $ | 0.69 | ||||||
| Dividend declared and paid per common share | $ | 0.19 | $ | — | ||||||
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CARTER’S, INC. BUSINESS SEGMENT RESULTS (dollars in thousands) (unaudited) |
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| Fiscal quarter ended | ||||||||||||||||||
|
March 29, 2014 |
% of Total |
March 30, 2013 |
% of Total |
|||||||||||||||
|
Net sales: |
||||||||||||||||||
| Carter’s Wholesale | $ | 271,628 | 41.7 | % | $ | 248,178 | 42.0 | % | ||||||||||
| Carter’s Retail (a) | 230,328 | 35.3 | % | 208,429 | 35.3 | % | ||||||||||||
| Total Carter’s | 501,956 | 77.0 | % | 456,607 | 77.3 | % | ||||||||||||
| OshKosh Retail (a) | 63,558 | 9.8 | % | 55,345 | 9.4 | % | ||||||||||||
| OshKosh Wholesale | 15,585 | 2.4 | % | 18,186 | 3.1 | % | ||||||||||||
| Total OshKosh | 79,143 | 12.2 | % | 73,531 | 12.4 | % | ||||||||||||
| International (b) | 70,544 | 10.8 | % | 60,871 | 10.3 | % | ||||||||||||
| Total net sales | $ | 651,643 | 100.0 | % | $ | 591,009 | 100.0 | % | ||||||||||
|
Operating income: |
% of |
% of |
||||||||||||||||
| Carter’s Wholesale | $ | 46,867 | 17.3 | % | $ | 50,410 | 20.3 | % | ||||||||||
| Carter’s Retail (a) | 42,979 | 18.7 | % | 39,644 | 19.0 | % | ||||||||||||
| Total Carter’s | 89,846 | 17.9 | % | 90,054 | 19.7 | % | ||||||||||||
| OshKosh Retail (a) | (4,489 | ) | (7.1 | )% | (5,391 | ) | (9.7 | )% | ||||||||||
| OshKosh Wholesale | 2,025 | 13.0 | % | 2,908 | 16.0 | % | ||||||||||||
| Total OshKosh | (2,464 | ) | (3.1 | )% | (2,483 | ) | (3.4 | )% | ||||||||||
| International (b) (c) | 4,036 | 5.7 | % | 4,598 | 7.6 | % | ||||||||||||
| Total segment operating income | 91,418 | 14.0 | % | 92,169 | 15.6 | % | ||||||||||||
| Corporate expenses (d) (e) | (29,887 | ) | (4.6 | )% | (25,226 | ) | (4.3 | )% | ||||||||||
| Total operating income | $ | 61,531 | 9.4 | % | $ | 66,943 | 11.3 | % | ||||||||||
| (a) | Includes eCommerce results. |
| (b) | Net sales includes international retail, eCommerce, and wholesale sales. Operating income includes international licensing income. |
| (c) | Includes charges associated with the revaluation of the Company’s contingent consideration of approximately $0.5 million and $0.9 million for the first quarter ended March 29, 2014 and March 30, 2013, respectively. Also includes a benefit of approximately $0.4 million for the quarter ended March 29, 2014, reflecting a favorable recovery on inventory related to the Company's exit from Japan retail operations. There were no such costs related to Japan for the quarter ended March 30, 2013. |
| (d) |
Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, building occupancy, information technology, certain legal fees, consulting, and audit fees. |
| (e) | Includes the following charges: |
| Fiscal quarter ended | |||||||||
| (dollars in millions) |
March 29, 2014 |
March 30, 2013 |
|||||||
| Closure of distribution facility in Hogansville, GA (1) | $ | 0.3 | $ | 0.6 | |||||
| Office consolidation costs | $ | 2.0 | $ | 8.0 | |||||
| Amortization of H.W. Carter and Sons tradenames | $ | 6.3 | $ | — | |||||
| (1) | Continuing operating costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. |
Certain prior year amounts have been reclassified for comparative purposes.
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CARTER’S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except for share data) (unaudited) |
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|
March 29, 2014 |
December 28, 2013 |
March 30, 2013 |
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| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 277,236 | $ | 286,546 | $ | 397,563 | ||||||
| Accounts receivable, net | 205,166 | 193,611 | 178,360 | |||||||||
| Finished goods inventories, net | 363,018 | 417,754 | 284,525 | |||||||||
| Prepaid expenses and other current assets | 26,362 | 35,157 | 21,612 | |||||||||
| Deferred income taxes | 37,343 | 37,313 | 31,708 | |||||||||
| Total current assets | 909,125 | 970,381 | 913,768 | |||||||||
| Property, plant, and equipment, net | 316,786 | 307,885 | 182,193 | |||||||||
| Tradenames and other intangibles, net | 323,967 | 330,258 | 305,974 | |||||||||
| Goodwill | 184,604 | 186,077 | 188,731 | |||||||||
| Deferred debt issuance costs, net | 7,758 | 8,088 | 2,682 | |||||||||
| Other assets | 10,109 | 9,795 | 4,333 | |||||||||
| Total assets | $ | 1,752,349 | $ | 1,812,484 | $ | 1,597,681 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 103,439 | $ | 164,010 | $ | 97,884 | ||||||
| Other current liabilities | 75,235 | 105,129 | 72,590 | |||||||||
| Total current liabilities | 178,674 | 269,139 | 170,474 | |||||||||
| Long-term debt | 586,000 | 586,000 | 186,000 | |||||||||
| Deferred income taxes | 118,032 | 121,434 | 112,015 | |||||||||
| Other long-term liabilities | 140,493 | 135,180 | 106,004 | |||||||||
| Total liabilities | $ | 1,023,199 | $ | 1,111,753 | $ | 574,493 | ||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at March 29, 2014, December 28, 2013, and March 30, 2013. | — | — | — | |||||||||
| Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 53,742,906, 54,541,879, and 59,358,011 shares issued and outstanding at March 29, 2014, December 28, 2013, and March 30, 2013, respectively | 537 | 545 | 594 | |||||||||
| Additional paid-in capital | 11,420 | 4,332 | 248,032 | |||||||||
| Accumulated other comprehensive loss | (12,842 | ) | (10,082 | ) | (12,670 | ) | ||||||
| Retained earnings | 730,035 | 705,936 | 787,232 | |||||||||
| Total stockholders’ equity | 729,150 | 700,731 | 1,023,188 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,752,349 | $ | 1,812,484 | $ | 1,597,681 | ||||||
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CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (dollars in thousands) (unaudited) |
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| Fiscal quarter ended | ||||||||||
|
March 29, 2014 |
March 30, 2013 |
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| Cash flows from operating activities: | ||||||||||
| Net income | $ | 34,297 | $ | 41,415 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 15,354 | 12,389 | ||||||||
| Amortization of H.W. Carter and Sons tradenames | 6,271 | — | ||||||||
| Non-cash revaluation of contingent consideration | 454 | 891 | ||||||||
| Amortization of debt issuance costs | 375 | 196 | ||||||||
| Non-cash stock-based compensation expense | 4,535 | 4,065 | ||||||||
| Income tax benefit from stock-based compensation | (3,370 | ) | (3,531 | ) | ||||||
| Loss on disposal of property, plant, and equipment | 189 | 88 | ||||||||
| Deferred income taxes | (3,320 | ) | 1,837 | |||||||
| Effect of changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (11,725 | ) | (10,402 | ) | ||||||
| Inventories | 53,309 | 64,592 | ||||||||
| Prepaid expenses and other assets | 8,424 | (221 | ) | |||||||
| Accounts payable and other liabilities | (74,233 | ) | (58,191 | ) | ||||||
| Net cash provided by operating activities | 30,560 | 53,128 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Capital expenditures | (32,083 | ) | (31,426 | ) | ||||||
| Net cash used in investing activities | (32,083 | ) | (31,426 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Payment of debt issuance costs | (55 | ) | — | |||||||
| Repurchase of common stock | (2,292 | ) | (8,942 | ) | ||||||
| Dividends paid | (10,208 | ) | — | |||||||
| Income tax benefit from stock-based compensation | 3,370 | 3,531 | ||||||||
| Withholdings from vesting of restricted stock | (4,079 | ) | (4,383 | ) | ||||||
| Proceeds from exercise of stock options | 5,546 | 3,760 | ||||||||
| Net cash used in financing activities | (7,718 | ) | (6,034 | ) | ||||||
| Effect of exchange rate changes on cash | (69 | ) | (341 | ) | ||||||
| Net (decrease) increase in cash and cash equivalents | (9,310 | ) | 15,327 | |||||||
| Cash and cash equivalents, beginning of period | 286,546 | 382,236 | ||||||||
| Cash and cash equivalents, end of period | $ | 277,236 | $ | 397,563 | ||||||
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CARTER’S, INC. RECONCILIATION OF GAAP TO ADJUSTED RESULTS (dollars in millions, except earnings per share) |
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| Fiscal quarter ended March 29, 2014 | |||||||||||||||||||||||||
|
Gross |
SG&A |
Operating |
Net Income | Diluted EPS | |||||||||||||||||||||
| As reported (GAAP) | $ | 261.7 | $ | 210.1 | $ | 61.5 | $34.3 | $ | 0.63 | ||||||||||||||||
| Amortization of tradenames (a) | — | (6.3 | ) | 6.3 | 4.0 | 0.07 | |||||||||||||||||||
| Office consolidation costs (b) | — | (2.0 | ) | 2.0 | 1.2 | 0.02 | |||||||||||||||||||
| Revaluation of contingent consideration (c) | — | (0.5 | ) | 0.5 | 0.5 | 0.01 | |||||||||||||||||||
| Facility-related closures (d) | — | (0.3 | ) | 0.3 | 0.2 | — | |||||||||||||||||||
| Japan retail operations exit (e) | (1.0 | ) | (0.6 | ) | (0.4 | ) | (0.3 | ) | (0.01 | ) | |||||||||||||||
| As adjusted (f) | $ | 260.7 | $ | 200.5 | $ | 70.1 | $39.9 | $ | 0.73 | ||||||||||||||||
| Fiscal quarter ended March 30, 2013 | |||||||||||||||||||||||||
|
Gross |
SG&A |
Operating |
Net Income | Diluted EPS | |||||||||||||||||||||
| As reported (GAAP) | $ | 243.1 | $ | 185.4 | $ | 66.9 | $ | 41.4 | $ | 0.69 | |||||||||||||||
| Office consolidation costs (b) | — | (8.0 | ) | 8.0 | 5.1 | 0.09 | |||||||||||||||||||
| Revaluation of contingent consideration (c) | — | (0.9 | ) | 0.9 | 0.9 | 0.02 | |||||||||||||||||||
| Facility-related closures (d) | — | (0.6 | ) | 0.6 | 0.4 | 0.01 | |||||||||||||||||||
| As adjusted (f) | $ | 243.1 | $ | 175.9 | $ | 76.4 | $ | 47.7 | $ | 0.79 | |||||||||||||||
|
(a) |
Amortization of acquired H.W. Carter and Sons tradenames. |
| (b) | Costs associated with office consolidation including severance, relocation, accelerated depreciation, and other charges. |
| (c) | Revaluation of the contingent consideration liability associated with the Company's 2011 acquisition of Bonnie Togs. |
| (d) | Costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. |
| (e) | Reflects a favorable recovery on inventory related to the exit of the Company's retail business in Japan. |
| (f) | In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations. |
|
Note: Results may not be additive due to rounding. Certain prior year amounts have been reclassified for comparative purposes. |
|
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CARTER’S, INC. RECONCILIATION OF GAAP TO ADJUSTED RESULTS (dollars in millions, except earnings per share) |
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| Fiscal quarter ended June 29, 2013 | ||||||||||||||||||||||||
|
Gross |
SG&A |
Operating |
Net Income | Diluted EPS | ||||||||||||||||||||
| As reported (GAAP) | $ | 220.2 | $ | 195.0 | $ | 32.7 | $ | 19.7 | $ | 0.33 | ||||||||||||||
| Office consolidation costs (a) | — | (10.2 | ) | 10.2 | 6.4 | 0.10 | ||||||||||||||||||
| Revaluation of contingent consideration (b) | — | (1.0 | ) | 1.0 | 1.0 | 0.02 | ||||||||||||||||||
| Amortization of tradenames (c) | — | (1.0 | ) | 1.0 | 0.6 | 0.01 | ||||||||||||||||||
| As adjusted (d) | $ | 220.2 | $ | 182.9 | $ | 44.9 | $ | 27.7 | $ | 0.46 | ||||||||||||||
| Fiscal year ended December 28, 2013 | ||||||||||||||||||||||||
|
Gross |
SG&A |
Operating |
Net Income | Diluted EPS | ||||||||||||||||||||
| As reported (GAAP) | $ | 1,095.4 | $ | 868.5 | $ | 264.2 | $ | 160.4 | $ | 2.75 | ||||||||||||||
| Office consolidation costs (a) | — | (33.3 | ) | 33.3 | 21.0 | 0.36 | ||||||||||||||||||
| Amortization of tradenames (c) | — | (13.6 | ) | 13.6 | 8.6 | 0.15 | ||||||||||||||||||
| Japan retail operations exit (e) | 1.1 | (3.0 | ) | 4.1 | 2.6 | 0.04 | ||||||||||||||||||
| Revaluation of contingent consideration (b) | — | (2.8 | ) | 2.8 | 2.8 | 0.05 | ||||||||||||||||||
| Facility-related closures (f) | — | (1.9 | ) | 1.9 | 1.2 | 0.02 | ||||||||||||||||||
| As adjusted (d) | $ | 1,096.4 | $ | 813.9 | $ | 319.8 | $ | 196.5 | $ | 3.37 | ||||||||||||||
| (a) | Costs associated with office consolidation including severance, relocation, accelerated depreciation, and other charges. |
| (b) | Revaluation of the contingent consideration liability associated with the Company's 2011 acquisition of Bonnie Togs. |
| (c) | Amortization of acquired H.W. Carter and Sons tradenames. |
| (d) | In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations. |
| (e) | Costs incurred to exit the Company's retail business in Japan. |
| (f) | Costs associated with the closure of the Company's distribution facility in Hogansville, Georgia. |
|
Note: Results may not be additive due to rounding. Certain prior year amounts have been reclassified for comparative purposes. |
|
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CARTER’S, INC. RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS |
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| Fiscal quarter ended | ||||||||||
|
March 29, 2014 |
March 30, 2013 |
|||||||||
| Weighted-average number of common and common equivalent shares outstanding: | ||||||||||
| Basic number of common shares outstanding | 53,172,459 | 58,467,804 | ||||||||
| Dilutive effect of equity awards | 501,322 | 877,404 | ||||||||
| Diluted number of common and common equivalent shares outstanding | 53,673,781 | 59,345,208 | ||||||||
|
As reported on a GAAP Basis: |
||||||||||
| Basic net income per common share: | ||||||||||
| Net income | $ | 34,297 | $ | 41,415 | ||||||
| Income allocated to participating securities | (470 | ) | (602 | ) | ||||||
| Net income available to common shareholders | $ | 33,827 | $ | 40,813 | ||||||
| Basic net income per common share | $ | 0.64 | $ | 0.70 | ||||||
| Diluted net income per common share: | ||||||||||
| Net income | $ | 34,297 | $ | 41,415 | ||||||
| Income allocated to participating securities | (467 | ) | (595 | ) | ||||||
| Net income available to common shareholders | $ | 33,830 | $ | 40,820 | ||||||
| Diluted net income per common share | $ | 0.63 | $ | 0.69 | ||||||
|
As adjusted (a): |
||||||||||
| Basic net income per common share: | ||||||||||
| Net income | $ | 39,866 | $ | 47,709 | ||||||
| Income allocated to participating securities | (547 | ) | (694 | ) | ||||||
| Net income available to common shareholders | $ | 39,319 | $ | 47,015 | ||||||
| Basic net income per common share | $ | 0.74 | $ | 0.80 | ||||||
| Diluted net income per common share: | ||||||||||
| Net income | $ | 39,866 | $ | 47,709 | ||||||
| Income allocated to participating securities | (543 | ) | (686 | ) | ||||||
| Net income available to common shareholders | $ | 39,323 | $ | 47,023 | ||||||
| Diluted net income per common share | $ | 0.73 | $ | 0.79 | ||||||
| (a) | In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present per share data excluding the adjustments discussed above. The Company has excluded $5.6 million and $6.3 million in after-tax expenses from these results for the first fiscal quarters of 2014 and 2013, respectively. |
RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
The following table provides a reconciliation of EBITDA and adjusted EBITDA for the periods indicated to net income (loss), which is the most directly comparable financial measure presented in accordance with U.S. Generally Accepted Accounting Principles (in thousands):
| Fiscal quarter ended |
Four fiscal |
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|
March 29, 2014 |
March 30, 2013 |
March 29, 2014 |
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| (dollars in millions) | |||||||||||||||||
| Net income | $ | 34.3 | $ | 41.4 | 153.3 | ||||||||||||
| Interest expense | 6.9 | 1.3 | 19.0 | ||||||||||||||
| Interest income | (0.1 | ) | (0.2 | ) | (0.6 | ) | |||||||||||
| Tax expense | 19.9 | 23.9 | 85.1 | ||||||||||||||
| Depreciation and amortization | 21.6 | 12.4 | 77.7 | ||||||||||||||
| EBITDA | $ | 82.5 | $ | 78.8 | $ | 334.5 | |||||||||||
| Adjustments to EBITDA | |||||||||||||||||
| Office consolidation costs (a) | $ | 2.0 | $ | 6.7 | 24.7 | ||||||||||||
| Revaluation of contingent consideration (b) | 0.5 | 0.9 | 2.4 | ||||||||||||||
| Facility-related closures (c) | 0.3 | 0.5 | 1.0 | ||||||||||||||
| Japan retail operations exit (d) | (1.0 | ) | — | 3.1 | |||||||||||||
| Adjusted EBITDA | $ | 84.3 | $ | 86.8 | $ | 365.7 | |||||||||||
| (a) | Costs related to consolidating our Shelton, Connecticut and Atlanta, Georgia offices, as well as certain functions from our other offices, into a new headquarters facility in Atlanta, Georgia. These amounts exclude costs related to accelerated depreciation as such amounts are included in the total of depreciation and amortization above. |
| (b) | Revaluation of the contingent consideration liability associated with the Company's 2011 acquisition of Bonnie Togs. |
| (c) | Costs related to the closure of a distribution facility located in Hogansville, GA, announced in the first quarter of fiscal 2012. These amounts exclude costs related to accelerated depreciation as such amounts are included in the total of depreciation and amortization above. |
| (d) |
Fiscal quarter and four fiscal quarters ended March 29, 2014 reflect a favorable recovery of inventory and net costs associated with the exit of the Company's retail business in Japan, respectively. These amounts exclude costs related to accelerated depreciation as such amounts are included in the total of depreciation and amortization above. |
|
Note: Results may not be additive due to rounding. |
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EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with U.S. GAAP. We define EBITDA as net income before interest, income taxes and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items described in the footnotes (a) - (d) to the table above.
We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
The use of EBITDA and Adjusted EBITDA instead of net income or cash flows from operations has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA, Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. EBITDA and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us for working capital, debt service and other purposes.
Source: Carter’s, Inc.
Carter’s, Inc.
Sean McHugh, 678-791-7615
Vice President &
Treasurer