-
Fourth quarter fiscal 2023 results
-
Net sales
$858 million vs.$912 million in Q4 2022 - Operating margin 15.9% vs. 12.0% in Q4 2022; adjusted operating margin 15.9% vs. 13.0% in Q4 2022
-
Diluted EPS
$2.90 vs.$2.11 in Q4 2022; adjusted diluted EPS$2.76 vs.$2.29 in Q4 2022
-
Net sales
-
Fiscal year 2023 results
-
Net sales
$2.9 billion vs.$3.2 billion in 2022 - Operating margin 11.0% vs. 11.8% in 2022; adjusted operating margin 11.1% vs. 12.1% in 2022
-
Diluted EPS
$6.24 vs.$6.34 in 2022; adjusted diluted EPS$6.19 vs.$6.90 in 2022 -
Operating cash flow
$529 million -
$212 million returned to shareholders through share repurchases and dividends
-
Net sales
-
Fiscal year 2024 outlook1:
-
Low single-digit growth in net sales to approximately
$3.0 billion - Mid single-digit growth in adjusted operating income
- Mid single-digit growth in adjusted diluted EPS
-
Board of Directors declares 7% increase in quarterly dividend to
$0.80 per share
-
Low single-digit growth in net sales to approximately
“We saw an improving trend in the demand for our brands in the final weeks of 2023,” said
“In the fourth quarter, we saw higher than planned demand in our
“For the year, our sales and earnings continued to reflect the lingering effects of inflation weighing on families with young children. We saw a noteworthy correlation between the improved consumer sentiment late in the year and the trend in our sales. That favorable trend in sales continued into the early weeks of 2024. With the continued moderation in inflation, growth in real wages, and low unemployment, we believe market conditions may improve in the year ahead.
“Carter’s continues to be the market leader in young children’s apparel with unparalleled relationships with the largest retailers in
“Carter’s has built a resilient multichannel business model which has historically enabled a double digit operating margin, strong operating cash flow, low leverage, and the return of excess capital to our shareholders.
“During the market disruptions in recent years caused by the global pandemic and historic inflation, we focused on higher margin sales driven by strengthening our product offerings, the closure of lower margin stores, leaner inventories, and improved price realization. We expect that these improvements to our operating disciplines will enable Carter’s to grow sales and earnings in 2024.
“We enter the new year with a better mix and level of inventories. Inventories last year were reduced by nearly 30% driven by the reduction of excess inventories that grew when inflation surged in 2022 and consumer demand slowed.
“Our growth this year is expected to be driven by our
“We believe Carter’s is best in class in young children’s apparel. As demonstrated in recent years, Carter’s has multiple levers that have enabled us to manage through historic periods of market volatility, and we believe we are well positioned to benefit from the market recovery in the years ahead.”
___________________________
1 Refer to “Business Outlook” section of this release for additional information regarding reconciliations of forward-looking non-GAAP financial measures.
Adjustments to Reported GAAP Results
In addition to the results presented in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements, as presented below. The Company believes these adjustments provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company’s underlying performance. These measures are presented for informational purposes only. See “Reconciliation of Adjusted Results to GAAP” section of this release for additional disclosures and reconciliations regarding these non-GAAP financial measures.
|
|
Fourth Fiscal Quarter |
|||||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
||||||||||||||||||||||
|
(In millions, except earnings per share) |
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
|
|
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
||||||||||
|
As reported (GAAP) |
$ |
136.1 |
|
15.9 |
% |
|
$ |
106.5 |
|
|
$ |
2.90 |
|
|
|
$ |
109.5 |
|
12.0 |
% |
|
$ |
80.2 |
|
$ |
2.11 |
|
Benefit from credit card settlement |
|
— |
|
|
|
|
(5.3 |
) |
|
|
(0.14 |
) |
|
|
|
— |
|
|
|
|
— |
|
|
— |
||
|
Intangible asset impairment |
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
9.0 |
|
|
|
|
6.9 |
|
|
0.18 |
||
|
As adjusted |
$ |
136.0 |
|
15.9 |
% |
|
$ |
101.2 |
|
|
$ |
2.76 |
|
|
|
$ |
118.5 |
|
13.0 |
% |
|
$ |
87.0 |
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Fiscal Year |
|||||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
||||||||||||||||||||||
|
(In millions, except earnings per share) |
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
|
|
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
||||||||||
|
As reported (GAAP) |
$ |
323.4 |
|
11.0 |
% |
|
$ |
232.5 |
|
|
$ |
6.24 |
|
|
|
$ |
379.2 |
|
11.8 |
% |
|
$ |
250.0 |
|
$ |
6.34 |
|
Organizational restructuring |
|
4.4 |
|
|
|
|
3.4 |
|
|
|
0.09 |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
||
|
Benefit from credit card settlement |
|
— |
|
|
|
|
(5.3 |
) |
|
|
(0.14 |
) |
|
|
|
— |
|
|
|
|
— |
|
|
— |
||
|
Loss on extinguishment of debt |
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
15.2 |
|
|
0.38 |
||
|
Intangible asset impairment |
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
9.0 |
|
|
|
|
6.9 |
|
|
0.17 |
||
|
As adjusted |
$ |
327.8 |
|
11.1 |
% |
|
$ |
230.6 |
|
|
$ |
6.19 |
|
|
|
$ |
388.2 |
|
12.1 |
% |
|
$ |
272.0 |
|
$ |
6.90 |
|
Note: Results may not be additive due to rounding. |
||||||||||||||||||||||||||
Consolidated Results
The discussion of results below is presented on an adjusted (non-GAAP) basis where noted.
Fourth Quarter of Fiscal 2023 compared to Fourth Quarter of Fiscal 2022
Net sales decreased
Operating income increased
Adjusted operating income (a non-GAAP measure) increased
Net income increased
Adjusted net income (a non-GAAP measure) increased
Fiscal Year 2023 compared to Fiscal Year 2022
Consolidated net sales decreased
Operating income in fiscal 2023 decreased
Adjusted operating income (a non-GAAP measure) decreased
Net income in fiscal 2023 decreased
Adjusted net income (a non-GAAP measure) decreased
Net cash provided by operations in fiscal 2023 was
See the “Business Segment Results” and “Reconciliation of Adjusted Results to GAAP” sections of this release for additional disclosures regarding business segment performance and non-GAAP measures.
Organizational Restructuring and Corporate Office Lease Amendment
Since the global pandemic, the Company has undertaken several organizational restructurings which have collectively reduced corporate offices headcount by approximately 15%. Actions taken in fiscal 2023 resulted in a pre-tax charges of
During the first quarter of fiscal 2023, the Company executed an amendment to the lease of its corporate headquarters in
The above organizational restructuring and corporate office lease amendment charges have been included as adjustments to our fiscal 2023 reported GAAP results.
Liquidity and Financial Position
The Company’s total liquidity at the end of fiscal 2023 was
Return of Capital
In the fourth quarter and fiscal 2023, the Company returned to shareholders a total of
-
Share repurchases: During the fourth quarter of fiscal 2023, the Company repurchased and retired approximately 0.5 million shares of its common stock for
$32.5 million at an average price of$69.10 per share. During fiscal 2023, the Company repurchased and retired approximately 1.4 million shares for$100.0 million at an average price of$69.17 per share. Fiscal 2023 share repurchases represented approximately 3.8% of common shares outstanding as of the beginning of fiscal year 2023. All shares were repurchased in open market transactions pursuant to applicable regulations for such transactions. As ofDecember 30, 2023 , the total remaining capacity under the Company’s previously announced repurchase authorizations was approximately$649.5 million .
-
Dividends: During the fourth quarter of fiscal 2023, the Company paid a cash dividend of
$0.75 per common share totaling$27.5 million . In fiscal 2023, the Company paid quarterly cash dividends of$0.75 per common share each quarter totaling$112.0 million .
On
From the inception of our return of capital initiatives in fiscal 2007 through fiscal 2023, the Company has returned a total of
The Company’s Board of Directors will evaluate future distributions of capital, including dividends and share repurchases, based on a number of factors, including business conditions, the Company’s financial performance, and other considerations.
Business Outlook
We do not reconcile forward-looking adjusted operating income or adjusted diluted earnings per share to their most directly comparable GAAP measures because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations that are not within our control due to factors described above, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future operating income or diluted EPS, the most directly comparable GAAP metrics to adjusted operating income and adjusted diluted earnings per share, respectively.
For fiscal year 2024, the Company expects:
-
Low single-digit growth in net sales to approximately
$3.0 billion ($2.95 billion in fiscal 2023); -
Mid single-digit growth in adjusted operating income (
$328 million in fiscal 2023); -
Mid single-digit growth in adjusted diluted earnings per share (
$6.19 in fiscal 2023); -
Operating cash flow in excess of
$250 million ; and -
Capital expenditures of
$80 million .
Our forecast for fiscal year 2024 assumes:
- Improved macroeconomic environment and consumer demand as the year progresses;
- Sales and earnings growth weighted to the second half;
- Continued conservative inventory commitments by wholesale customers;
- Gross margin expansion, driven by lower ocean freight rates, lower product costs, and growth in higher margin retail sales;
- Increased SG&A, reflecting higher growth-related investments and inflation, partially offset by productivity initiatives;
- Higher interest expense and effective tax rate; and
- Lower average number of shares outstanding.
For the first quarter of fiscal 2024, the Company expects approximately:
-
$620 million to$645 million in net sales ($696 million in Q1 fiscal 2023); -
$35 million to$40 million in adjusted operating income ($58 million in Q1 fiscal 2023); and -
$0.60 to$0.70 in adjusted diluted earnings per share ($0.98 Q1 fiscal 2023).
Our forecast for the first quarter of fiscal 2024 assumes:
-
A mid single-digit to high single-digit decline in
U.S. Retail sales, a mid-teens decline inU.S. Wholesale sales (reflecting earlier demand for our spring product offerings and lower off-price channel sales), and a low single-digit to mid single-digit decline in International sales; - Gross margin expansion, reflecting lower inbound freight rates, lower product costs, and favorable channel mix;
- Increased SG&A, driven by new store openings and higher performance-based compensation provisions;
- Lower interest expense and effective tax rate; and
- Lower average number of shares outstanding.
Conference Call
The Company will hold a conference call with investors to discuss fourth quarter and fiscal 2023 results and its business outlook on
A webcast replay will be available shortly after the conclusion of the call at ir.carters.com.
About Carter’s, Inc.
Carter’s, Inc. is the largest branded marketer in
Forward Looking Statements
Statements contained in this press release that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “are confident” and similar words are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this press release. These risks and uncertainties include, but are not limited to, the factors disclosed in Part I, Item 1A. “Risk Factors” of the Company’s most recently filed Annual Report on Form 10-K, and otherwise in our reports and filings with the
|
CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except for share data) (unaudited) |
||||||||||||||||
|
|
|
For the fiscal quarter ended |
|
For the fiscal year ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net sales |
|
$ |
857,864 |
|
|
$ |
912,129 |
|
|
$ |
2,945,594 |
|
|
$ |
3,212,733 |
|
|
Cost of goods sold |
|
|
439,689 |
|
|
|
496,580 |
|
|
|
1,549,659 |
|
|
|
1,740,375 |
|
|
Gross profit |
|
|
418,175 |
|
|
|
415,549 |
|
|
|
1,395,935 |
|
|
|
1,472,358 |
|
|
Royalty income, net |
|
|
4,837 |
|
|
|
5,471 |
|
|
|
21,410 |
|
|
|
25,820 |
|
|
Selling, general, and administrative expenses |
|
|
286,952 |
|
|
|
302,473 |
|
|
|
1,093,940 |
|
|
|
1,110,007 |
|
|
Intangible asset impairment |
|
|
— |
|
|
|
9,000 |
|
|
|
— |
|
|
|
9,000 |
|
|
Operating income |
|
|
136,060 |
|
|
|
109,547 |
|
|
|
323,405 |
|
|
|
379,171 |
|
|
Interest expense |
|
|
7,631 |
|
|
|
9,285 |
|
|
|
33,973 |
|
|
|
42,781 |
|
|
Interest income |
|
|
(2,007 |
) |
|
|
(394 |
) |
|
|
(4,776 |
) |
|
|
(1,261 |
) |
|
Other (income) expense, net |
|
|
(7,516 |
) |
|
|
200 |
|
|
|
(8,034 |
) |
|
|
975 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,940 |
|
|
Income before income taxes |
|
|
137,952 |
|
|
|
100,456 |
|
|
|
302,242 |
|
|
|
316,736 |
|
|
Income tax provision |
|
|
31,441 |
|
|
|
20,277 |
|
|
|
69,742 |
|
|
|
66,698 |
|
|
Net income |
|
$ |
106,511 |
|
|
$ |
80,179 |
|
|
$ |
232,500 |
|
|
$ |
250,038 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic net income per common share |
|
$ |
2.90 |
|
|
$ |
2.11 |
|
|
$ |
6.24 |
|
|
$ |
6.34 |
|
|
Diluted net income per common share |
|
$ |
2.90 |
|
|
$ |
2.11 |
|
|
$ |
6.24 |
|
|
$ |
6.34 |
|
|
Dividend declared and paid per common share |
|
$ |
0.75 |
|
|
$ |
0.75 |
|
|
$ |
3.00 |
|
|
$ |
3.00 |
|
|
CARTER’S, INC. CONDENSED BUSINESS SEGMENT RESULTS (dollars in thousands) (unaudited) |
||||||||||||||||||||||||||||
|
|
For the fiscal quarter ended |
|
|
For the fiscal year ended |
||||||||||||||||||||||||
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
|
% of
|
|
|
|
% of
|
||||||||||||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
479,798 |
|
|
56.0 |
% |
|
$ |
526,495 |
|
|
57.7 |
% |
|
|
$ |
1,501,780 |
|
|
51.0 |
% |
|
$ |
1,680,159 |
|
|
52.3 |
% |
|
|
|
247,389 |
|
|
28.8 |
% |
|
|
260,699 |
|
|
28.6 |
% |
|
|
|
1,014,584 |
|
|
34.4 |
% |
|
|
1,080,471 |
|
|
33.6 |
% |
|
International |
|
130,677 |
|
|
15.2 |
% |
|
|
124,935 |
|
|
13.7 |
% |
|
|
|
429,230 |
|
|
14.6 |
% |
|
|
452,103 |
|
|
14.1 |
% |
|
Total consolidated net sales |
$ |
857,864 |
|
|
100.0 |
% |
|
$ |
912,129 |
|
|
100.0 |
% |
|
|
$ |
2,945,594 |
|
|
100.0 |
% |
|
$ |
3,212,733 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Operating income: |
|
|
Operating
|
|
|
|
Operating
|
|
|
|
|
Operating
|
|
|
|
Operating
|
||||||||||||
|
|
$ |
87,487 |
|
|
18.2 |
% |
|
$ |
89,240 |
|
|
16.9 |
% |
|
|
$ |
190,620 |
|
|
12.7 |
% |
|
$ |
252,497 |
|
|
15.0 |
% |
|
|
|
51,846 |
|
|
21.0 |
% |
|
|
27,571 |
|
|
10.6 |
% |
|
|
|
198,849 |
|
|
19.6 |
% |
|
|
161,659 |
|
|
15.0 |
% |
|
International |
|
21,746 |
|
|
16.6 |
% |
|
|
16,953 |
|
|
13.6 |
% |
|
|
|
44,940 |
|
|
10.5 |
% |
|
|
56,617 |
|
|
12.5 |
% |
|
Corporate expenses (*) |
|
(25,019 |
) |
|
n/a |
|
|
|
(24,217 |
) |
|
n/a |
|
|
|
|
(111,004 |
) |
|
n/a |
|
|
|
(91,602 |
) |
|
n/a |
|
|
Total operating income |
$ |
136,060 |
|
|
15.9 |
% |
|
$ |
109,547 |
|
|
12.0 |
% |
|
|
$ |
323,405 |
|
|
11.0 |
% |
|
$ |
379,171 |
|
|
11.8 |
% |
|
(*) |
Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include unallocated accounting, finance, legal, human resources, and information technology expenses, occupancy costs for our corporate headquarters, and other benefit and compensation programs, including performance-based compensation. |
|
(dollars in millions) |
Fiscal quarter ended |
|
Fiscal year ended |
||||||||||||||
|
Charges: |
|
|
|
|
International |
|
|
|
|
|
International |
||||||
|
Organizational restructuring (*) |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
0.2 |
|
(*) |
The fiscal year ended |
|
(dollars in millions) |
Fiscal quarter ended |
|
Fiscal year ended |
||||||||||||||
|
Charges: |
|
|
|
|
International |
|
|
|
|
|
International |
||||||
|
|
$ |
0.4 |
|
$ |
5.6 |
|
$ |
3.0 |
|
$ |
0.4 |
|
$ |
5.6 |
|
$ |
3.0 |
|
Note: Results may not be additive due to rounding. |
|||||||||||||||||
|
CARTER’S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except for share data) (unaudited) |
|||||||
|
|
|
|
|
||||
|
ASSETS |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
351,213 |
|
|
$ |
211,748 |
|
|
Accounts receivable, net of allowance for credit losses of |
|
183,774 |
|
|
|
198,587 |
|
|
Finished goods inventories |
|
537,125 |
|
|
|
744,573 |
|
|
Prepaid expenses and other current assets |
|
29,131 |
|
|
|
33,812 |
|
|
Total current assets |
|
1,101,243 |
|
|
|
1,188,720 |
|
|
Property, plant, and equipment, net |
|
183,111 |
|
|
|
189,822 |
|
|
Operating lease assets |
|
528,407 |
|
|
|
492,335 |
|
|
Tradenames, net |
|
298,186 |
|
|
|
298,393 |
|
|
|
|
210,537 |
|
|
|
209,333 |
|
|
Customer relationships, net |
|
27,238 |
|
|
|
30,564 |
|
|
Other assets |
|
29,891 |
|
|
|
30,548 |
|
|
Total assets |
$ |
2,378,613 |
|
|
$ |
2,439,715 |
|
|
|
|
|
|
||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
$ |
242,149 |
|
|
$ |
264,078 |
|
|
Current operating lease liabilities |
|
135,369 |
|
|
|
142,432 |
|
|
Other current liabilities |
|
134,344 |
|
|
|
122,439 |
|
|
Total current liabilities |
|
511,862 |
|
|
|
528,949 |
|
|
Long-term debt, net |
|
497,354 |
|
|
|
616,624 |
|
|
Deferred income taxes |
|
41,470 |
|
|
|
41,235 |
|
|
Long-term operating lease liabilities |
|
448,810 |
|
|
|
421,741 |
|
|
Other long-term liabilities |
|
33,867 |
|
|
|
34,757 |
|
|
Total liabilities |
$ |
1,533,363 |
|
|
$ |
1,643,306 |
|
|
|
|
|
|
||||
|
Shareholders’ equity: |
|
|
|
||||
|
Preferred stock; par value |
$ |
— |
|
|
$ |
— |
|
|
Common stock, voting; par value |
|
366 |
|
|
|
377 |
|
|
Additional paid-in capital |
|
— |
|
|
|
— |
|
|
Accumulated other comprehensive loss |
|
(23,915 |
) |
|
|
(34,338 |
) |
|
Retained earnings |
|
868,799 |
|
|
|
830,370 |
|
|
Total shareholders’ equity |
|
845,250 |
|
|
|
796,409 |
|
|
Total liabilities and shareholders’ equity |
$ |
2,378,613 |
|
|
$ |
2,439,715 |
|
|
CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (dollars in thousand) (unaudited) |
||||||||
|
|
|
For the fiscal year ended |
||||||
|
|
|
|
|
|
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net income |
|
$ |
232,500 |
|
|
$ |
250,038 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
|
Depreciation of property, plant, and equipment |
|
|
60,407 |
|
|
|
61,543 |
|
|
Amortization of intangible assets |
|
|
3,732 |
|
|
|
3,733 |
|
|
(Recoveries of) provisions for excess and obsolete inventory, net |
|
|
(10,439 |
) |
|
|
5,039 |
|
|
Intangible asset impairments |
|
|
— |
|
|
|
9,000 |
|
|
Gain on partial termination of corporate lease |
|
|
(4,366 |
) |
|
|
— |
|
|
Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries |
|
|
3,078 |
|
|
|
372 |
|
|
Amortization of debt issuance costs |
|
|
1,586 |
|
|
|
1,950 |
|
|
Stock-based compensation expense |
|
|
19,463 |
|
|
|
21,879 |
|
|
Unrealized foreign currency exchange gain, net |
|
|
(207 |
) |
|
|
(78 |
) |
|
Provisions for doubtful accounts receivable from customers |
|
|
471 |
|
|
|
75 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
19,940 |
|
|
Unrealized (gain) loss on investments |
|
|
(2,237 |
) |
|
|
2,475 |
|
|
Deferred income tax benefit |
|
|
(600 |
) |
|
|
(740 |
) |
|
Other |
|
|
— |
|
|
|
919 |
|
|
Effect of changes in operating assets and liabilities: |
|
|
|
|
||||
|
Accounts receivable |
|
|
15,453 |
|
|
|
32,683 |
|
|
Finished goods inventories |
|
|
222,920 |
|
|
|
(106,763 |
) |
|
Prepaid expenses and other assets |
|
|
4,317 |
|
|
|
14,897 |
|
|
Accounts payable and other liabilities |
|
|
(16,946 |
) |
|
|
(228,601 |
) |
|
Net cash provided by operating activities |
|
$ |
529,132 |
|
|
$ |
88,361 |
|
|
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Capital expenditures |
|
$ |
(59,860 |
) |
|
$ |
(40,364 |
) |
|
Net cash used in investing activities |
|
$ |
(59,860 |
) |
|
$ |
(40,364 |
) |
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Payment of senior notes due 2025 |
|
$ |
— |
|
|
$ |
(500,000 |
) |
|
Premiums paid to extinguish debt |
|
|
— |
|
|
|
(15,678 |
) |
|
Payments of debt issuance costs |
|
|
— |
|
|
|
(2,420 |
) |
|
Borrowings under secured revolving credit facility |
|
|
70,000 |
|
|
|
240,000 |
|
|
Payments on secured revolving credit facility |
|
|
(190,000 |
) |
|
|
(120,000 |
) |
|
Repurchase of common stock |
|
|
(100,034 |
) |
|
|
(299,667 |
) |
|
Dividends paid |
|
|
(112,005 |
) |
|
|
(118,113 |
) |
|
Withholdings from vesting of restricted stock |
|
|
(5,024 |
) |
|
|
(6,930 |
) |
|
Proceeds from exercise of stock options |
|
|
4,418 |
|
|
|
4,457 |
|
|
Other |
|
|
— |
|
|
|
(919 |
) |
|
Net cash used in financing activities |
|
$ |
(332,645 |
) |
|
$ |
(819,270 |
) |
|
|
|
|
|
|
||||
|
Net effect of exchange rate changes on cash |
|
|
2,838 |
|
|
|
(1,273 |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
139,465 |
|
|
$ |
(772,546 |
) |
|
Cash and cash equivalents, beginning of fiscal year |
|
|
211,748 |
|
|
|
984,294 |
|
|
Cash and cash equivalents, end of fiscal year |
|
$ |
351,213 |
|
|
$ |
211,748 |
|
|
CARTER’S, INC. RECONCILIATION OF ADJUSTED RESULTS TO GAAP (dollars in millions, except earnings per share) (unaudited) |
|||||||||||||||||||||||||||||
|
|
Fiscal quarter ended |
||||||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
||||||||||||
|
As reported (GAAP) |
$ |
418.2 |
|
48.7 |
% |
|
$ |
287.0 |
|
33.4 |
% |
|
$ |
136.1 |
|
15.9 |
% |
|
$ |
31.4 |
|
|
$ |
106.5 |
|
|
$ |
2.90 |
|
|
Benefit from credit card settlement (b) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(1.7 |
) |
|
|
(5.3 |
) |
|
|
(0.14 |
) |
|||
|
As adjusted (a) |
$ |
418.2 |
|
48.7 |
% |
|
$ |
287.0 |
|
33.5 |
% |
|
$ |
136.0 |
|
15.9 |
% |
|
$ |
29.8 |
|
|
$ |
101.2 |
|
|
$ |
2.76 |
|
|
|
Three Fiscal Quarters Ended |
||||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
||||||||||
|
As reported (GAAP) |
$ |
977.8 |
|
46.8 |
% |
|
$ |
807.0 |
|
|
38.7 |
% |
|
$ |
187.3 |
|
9.0 |
% |
|
$ |
38.3 |
|
$ |
126.0 |
|
$ |
3.36 |
|
Organizational restructuring (c) |
|
— |
|
|
|
|
(4.4 |
) |
|
|
|
|
4.4 |
|
|
|
|
1.0 |
|
|
3.4 |
|
|
0.09 |
|||
|
As adjusted (a) |
$ |
977.8 |
|
46.8 |
% |
|
$ |
802.6 |
|
|
38.4 |
% |
|
$ |
191.8 |
|
9.2 |
% |
|
$ |
39.3 |
|
$ |
129.4 |
|
$ |
3.45 |
|
|
Fiscal year ended |
|||||||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||||||
|
As reported (GAAP) |
$ |
1,395.9 |
|
47.4 |
% |
|
$ |
1,093.9 |
|
|
37.1 |
% |
|
$ |
323.4 |
|
11.0 |
% |
|
$ |
69.7 |
|
|
$ |
232.5 |
|
|
$ |
6.24 |
|
|
Organizational restructuring (c) |
|
— |
|
|
|
|
(4.4 |
) |
|
|
|
|
4.4 |
|
|
|
|
1.0 |
|
|
|
3.4 |
|
|
|
0.09 |
|
|||
|
Benefit from credit card settlement (b) |
|
— |
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
(1.7 |
) |
|
|
(5.3 |
) |
|
|
(0.14 |
) |
|||
|
As adjusted (a) |
$ |
1,395.9 |
|
47.4 |
% |
|
$ |
1,089.5 |
|
|
37.0 |
% |
|
$ |
327.8 |
|
11.1 |
% |
|
$ |
69.1 |
|
|
$ |
230.6 |
|
|
$ |
6.19 |
|
|
|
Fiscal quarter ended |
|||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||
|
As reported (GAAP) |
$ |
415.5 |
|
45.6 |
% |
|
$ |
302.5 |
|
33.2 |
% |
|
$ |
109.5 |
|
12.0 |
% |
|
$ |
20.3 |
|
$ |
80.2 |
|
$ |
2.11 |
|
Intangible asset impairment (d) |
|
— |
|
|
|
|
— |
|
|
|
|
9.0 |
|
|
|
|
2.1 |
|
|
6.9 |
|
|
0.18 |
|||
|
As adjusted (a) |
$ |
415.5 |
|
45.6 |
% |
|
$ |
302.5 |
|
33.2 |
% |
|
$ |
118.5 |
|
13.0 |
% |
|
$ |
22.4 |
|
$ |
87.0 |
|
$ |
2.29 |
|
|
Fiscal year ended |
|||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||
|
As reported (GAAP) |
$ |
1,472.4 |
|
45.8 |
% |
|
$ |
1,110.0 |
|
34.6 |
% |
|
$ |
379.2 |
|
11.8 |
% |
|
$ |
66.7 |
|
$ |
250.0 |
|
$ |
6.34 |
|
Intangible asset impairment (d) |
|
— |
|
|
|
|
— |
|
|
|
|
9.0 |
|
|
|
|
2.1 |
|
|
6.9 |
|
|
0.17 |
|||
|
Loss on extinguishment of debt (e) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4.8 |
|
|
15.2 |
|
|
0.38 |
|||
|
As adjusted (a) |
$ |
1,472.4 |
|
45.8 |
% |
|
$ |
1,110.0 |
|
34.6 |
% |
|
$ |
388.2 |
|
12.1 |
% |
|
$ |
73.6 |
|
$ |
272.0 |
|
$ |
6.90 |
|
|
Fiscal Quarter Ended |
||||||||||||||||||||||||||
|
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
||||||||||
|
As reported (GAAP) |
$ |
309.5 |
|
44.5 |
% |
|
$ |
259.6 |
|
|
37.3 |
% |
|
$ |
56.4 |
|
8.1 |
% |
|
$ |
11.7 |
|
$ |
36.0 |
|
$ |
0.95 |
|
Organizational restructuring (c) |
|
— |
|
|
|
|
(1.2 |
) |
|
|
|
|
1.2 |
|
|
|
|
0.3 |
|
|
0.9 |
|
|
0.03 |
|||
|
As adjusted (a) |
$ |
309.5 |
|
44.5 |
% |
|
$ |
258.5 |
|
|
37.1 |
% |
|
$ |
57.5 |
|
8.3 |
% |
|
$ |
12.0 |
|
$ |
36.9 |
|
$ |
0.98 |
| (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 gross profit, SG&A, operating income, income taxes, 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 and afford investors a view of what management considers to be the Company's core performance. These measures are used by the Company's executive management to assess the Company's performance. 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. |
|
| (b) |
Gain resulting from a court-approved settlement related to payment card interchange fees. |
|
| (c) |
Net expenses related to organizational restructuring and related corporate office lease amendment actions. |
|
| (d) |
Related to the write-down of the Skip Hop tradename asset. |
|
| (e) |
Related to the redemption of the |
|
|
|
||
| Note: Results may not be additive due to rounding. | ||
|
CARTER’S, INC. RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS (unaudited) |
|||||||||||||||
|
|
For the fiscal quarter ended |
|
For the fiscal year ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average number of common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
||||||||
|
Basic number of common shares outstanding |
|
35,992,362 |
|
|
|
37,453,066 |
|
|
|
36,589,922 |
|
|
|
38,822,737 |
|
|
Dilutive effect of equity awards |
|
3,172 |
|
|
|
11,001 |
|
|
|
3,344 |
|
|
|
27,908 |
|
|
Diluted number of common and common equivalent shares outstanding |
|
35,995,534 |
|
|
|
37,464,067 |
|
|
|
36,593,266 |
|
|
|
38,850,645 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
As reported on a GAAP Basis: |
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
||||||||
|
Basic net income per common share: |
|
|
|
|
|
|
|
||||||||
|
Net income |
$ |
106,511 |
|
|
$ |
80,179 |
|
|
$ |
232,500 |
|
|
$ |
250,038 |
|
|
Income allocated to participating securities |
|
(2,076 |
) |
|
|
(1,251 |
) |
|
|
(4,285 |
) |
|
|
(3,714 |
) |
|
Net income available to common shareholders |
$ |
104,435 |
|
|
$ |
78,928 |
|
|
$ |
228,215 |
|
|
$ |
246,324 |
|
|
Basic net income per common share |
$ |
2.90 |
|
|
$ |
2.11 |
|
|
$ |
6.24 |
|
|
$ |
6.34 |
|
|
Diluted net income per common share: |
|
|
|
|
|
|
|
||||||||
|
Net income |
$ |
106,511 |
|
|
$ |
80,179 |
|
|
$ |
232,500 |
|
|
$ |
250,038 |
|
|
Income allocated to participating securities |
|
(2,076 |
) |
|
|
(1,251 |
) |
|
|
(4,285 |
) |
|
|
(3,712 |
) |
|
Net income available to common shareholders |
$ |
104,435 |
|
|
$ |
78,928 |
|
|
$ |
228,215 |
|
|
$ |
246,326 |
|
|
Diluted net income per common share |
$ |
2.90 |
|
|
$ |
2.11 |
|
|
$ |
6.24 |
|
|
$ |
6.34 |
|
|
As adjusted (a): |
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
||||||||
|
Basic net income per common share: |
|
|
|
|
|
|
|
||||||||
|
Net income |
$ |
101,199 |
|
|
$ |
87,039 |
|
|
$ |
230,605 |
|
|
$ |
272,049 |
|
|
Income allocated to participating securities |
|
(1,969 |
) |
|
|
(1,362 |
) |
|
|
(4,249 |
) |
|
|
(4,056 |
) |
|
Net income available to common shareholders |
$ |
99,230 |
|
|
$ |
85,677 |
|
|
$ |
226,356 |
|
|
$ |
267,993 |
|
|
Basic net income per common share |
$ |
2.76 |
|
|
$ |
2.29 |
|
|
$ |
6.19 |
|
|
$ |
6.90 |
|
|
Diluted net income per common share: |
|
|
|
|
|
|
|
||||||||
|
Net income |
$ |
101,199 |
|
|
$ |
87,039 |
|
|
$ |
230,605 |
|
|
$ |
272,049 |
|
|
Income allocated to participating securities |
|
(1,969 |
) |
|
|
(1,362 |
) |
|
|
(4,248 |
) |
|
|
(4,055 |
) |
|
Net income available to common shareholders |
$ |
99,230 |
|
|
$ |
85,677 |
|
|
$ |
226,357 |
|
|
$ |
267,994 |
|
|
Diluted net income per common share |
$ |
2.76 |
|
|
$ |
2.29 |
|
|
$ |
6.19 |
|
|
$ |
6.90 |
|
|
(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 presented above. The Company excluded approximately |
|
RECONCILIATION OF ADJUSTED RESULTS TO GAAP (unaudited) |
|||||||||||||||
|
The following table provides a reconciliation of EBITDA and Adjusted EBITDA for the periods indicated to net income, which is the most directly comparable financial measure presented in accordance with GAAP: |
|||||||||||||||
|
|
Fiscal quarter ended |
|
Fiscal year ended |
||||||||||||
|
(dollars in millions) |
|
|
|
|
|
|
|
||||||||
|
Net income |
$ |
106.5 |
|
|
$ |
80.2 |
|
|
$ |
232.5 |
|
|
$ |
250.0 |
|
|
Interest expense |
|
7.6 |
|
|
|
9.3 |
|
|
|
34.0 |
|
|
|
42.8 |
|
|
Interest income |
|
(2.0 |
) |
|
|
(0.4 |
) |
|
|
(4.8 |
) |
|
|
(1.3 |
) |
|
Tax expense |
|
31.4 |
|
|
|
20.3 |
|
|
|
69.7 |
|
|
|
66.7 |
|
|
Depreciation and amortization |
|
15.6 |
|
|
|
16.5 |
|
|
|
64.1 |
|
|
|
65.3 |
|
|
EBITDA |
$ |
159.1 |
|
|
$ |
125.8 |
|
|
$ |
395.6 |
|
|
$ |
423.5 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjustments to EBITDA |
|
|
|
|
|
|
|
||||||||
|
Benefit from credit card settlement (a) |
$ |
(6.9 |
) |
|
$ |
— |
|
|
$ |
(6.9 |
) |
|
$ |
— |
|
|
Organizational restructuring (b) |
|
— |
|
|
|
— |
|
|
|
4.4 |
|
|
|
— |
|
|
Intangible asset impairment (c) |
|
— |
|
|
|
9.0 |
|
|
|
— |
|
|
|
9.0 |
|
|
Loss on extinguishment of debt (d) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19.9 |
|
|
Total adjustments |
|
(6.9 |
) |
|
|
9.0 |
|
|
|
(2.5 |
) |
|
|
28.9 |
|
|
Adjusted EBITDA |
$ |
152.2 |
|
|
$ |
134.8 |
|
|
$ |
393.0 |
|
|
$ |
452.5 |
|
| (a) |
Gain resulting from a court-approved settlement related to payment card interchange fees. |
|
| (b) |
Net expenses related to organizational restructuring and related corporate office lease amendment actions. |
|
| (c) |
Related to the write-down of the Skip Hop tradename asset. |
|
| (d) |
Related to the redemption of the |
|
|
|
||
| Note: Results may not be additive due to rounding. | ||
EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with 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 to be 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. These measures are used by the Company's executive management to assess the Company's performance.
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.
|
RECONCILIATION OF (dollars in millions) (unaudited) |
|||||||||||||||||
|
The tables below reflect the calculation of constant currency for total net sales of the International segment and consolidated net sales for the fiscal quarter and fiscal year ended |
|||||||||||||||||
|
|
Fiscal quarter ended |
||||||||||||||||
|
|
Reported
|
|
Impact of
|
|
Constant-
|
|
Reported
|
|
Reported
|
|
Constant-
|
||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consolidated net sales |
$ |
857.9 |
|
$ |
2.2 |
|
$ |
855.6 |
|
$ |
912.1 |
|
(5.9 |
)% |
|
(6.2 |
)% |
|
International segment net sales |
$ |
130.7 |
|
$ |
2.2 |
|
$ |
128.5 |
|
$ |
124.9 |
|
4.6 |
% |
|
2.8 |
% |
|
|
Fiscal year ended |
||||||||||||||||
|
|
Reported
|
|
Impact of
|
|
Constant-
|
|
Reported
|
|
Reported
|
|
Constant-
|
||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consolidated net sales |
$ |
2,945.6 |
|
$ |
0.1 |
|
$ |
2,945.5 |
|
$ |
3,212.7 |
|
(8.3 |
) % |
|
(8.3 |
) % |
|
International segment net sales |
$ |
429.2 |
|
$ |
0.1 |
|
$ |
429.2 |
|
$ |
452.1 |
|
(5.1 |
) % |
|
(5.1 |
) % |
|
The Company evaluates its net sales on both an “as reported” and a “constant currency” basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. Constant currency net sales results are calculated by translating current period net sales in local currency to the |
|
|
|
|
| Note: Results may not be additive due to rounding. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240226809729/en/
Vice President & Treasurer
(678) 791-7615
Source: Carter’s, Inc.