Columbia Sportswear Company Reports First Quarter 2022 Financial Results and Updates Full Year 2022 Financial Outlook; Announces $500 Million Increase to Stock Repurchase Authorization
Columbia Sportswear reported a significant 22% increase in net sales for Q1 2022, reaching a record $761.5 million. Operating income rose by 19% to $83.7 million, representing 11.0% of net sales. Diluted earnings per share were up 23% at $1.03, compared to $0.84 in Q1 2021. The company executed $217.3 million in stock repurchases and approved an additional $500 million for share buybacks on April 22, 2022.
- Net sales increased by 22% to $761.5 million.
- Operating income rose by 19% to $83.7 million, maintaining strong profit margins.
- Diluted earnings per share increased by 23% to $1.03.
- Share repurchase program expanded with an additional $500 million authorization.
- Operating income margin slightly decreased from 11.3% to 11.0%.
First Quarter 2022 Highlights
-
Net sales increased 22 percent to a record
$761.5 million -
Operating income increased 19 percent to
$83.7 million $70.5 million -
Diluted earnings per share increased 23 percent to
$1.03 $0.84 -
The Company repurchased
$217.3 million -
On
April 22, 2022 , the Board of Directors approved a$500 million
Full Year 2022 Financial Outlook
The following forward-looking statements reflect our expectations as of
-
Net sales of
$3.63 $3.69 billion -
Operating income of
$477 $502 million $472 $498 million -
Diluted earnings per share of
$5.70 $6.00 $5.50 $5.80
Chairman, President and Chief Executive Officer
"Based on an encouraging start to 2022 and lower share count, we are increasing our full year earnings and diluted earnings per share outlook and reiterating our net sales outlook despite removing future sales to our Russian-based distributor for the balance of the year.
“Our profitable growth trajectory, fortress balance sheet and global team of dedicated employees provide a foundation of strength from which we will continue to invest in our strategic priorities to:
- drive brand awareness and sales growth through increased, focused demand creation investments;
- enhance consumer experience and digital capabilities in all our channels and geographies;
- expand and improve global direct-to-consumer operations with supporting processes and systems; and
- invest in our people and optimize our organization across our portfolio of brands."
CFO's Commentary and Financial Review Presentation Available Online
For a detailed review of the Company's first quarter 2022 financial results, please refer to the CFO Commentary and Financial Review presentation furnished to the
First Quarter 2022 Financial Results
(All comparisons are between first quarter 2022 and first quarter 2021, unless otherwise noted.)
Net sales increased 22 percent to
Gross margin contracted 170 basis points to 49.7 percent of net sales from 51.4 percent of net sales for the comparable period in 2021. Gross margin contraction was primarily driven by higher inbound freight costs, unfavorable year-over-year changes in inventory provisions, unfavorable regional sales mix, and lower wholesale product margins, partially offset by higher direct-to-consumer ("DTC") product margins.
SG&A expenses increased 18 percent to
Operating income increased 19 percent to
Income tax expense of
Net income increased 20 percent to
Balance Sheet as of
Cash, cash equivalents and short-term investments totaled
The Company had no borrowings as of
Inventories increased 36 percent to
Cash Flow for the Three Months Ended
Net cash used in operating activities was
Capital expenditures totaled
Share Repurchases for the Three Months Ended
The Company repurchased 2,328,623 shares of common stock for an aggregate of
At
Quarterly Cash Dividend
The Board of Directors approved a regular quarterly cash dividend of
Full Year 2022 Financial Outlook
(Additional financial outlook details can be found in the CFO Commentary and Financial Review presentation.)
The Company's 2022 Financial Outlook is forward-looking in nature, and the following forward-looking statements reflect our expectations as of
Net sales are expected to increase 16 to 18 percent (unchanged) to
Gross margin is expected to contract approximately 130 basis points (prior approximately 160 bps contraction) to approximately 50.3 percent (prior approximately 50 percent) of net sales from 51.6 percent of net sales in 2021.
SG&A expenses are expected to increase at a slightly slower rate than net sales growth. SG&A expense as a percent of net sales is expected to be 37.3 to 37.7 percent (prior 37.2 to 37.5 percent), compared to SG&A expenses as a percent of net sales of 37.8 percent in 2021. Demand creation as a percent of net sales is anticipated to be 6.0 percent in 2022, compared to 5.9 percent in 2021.
Operating income is expected to be
Effective income tax rate is expected to be approximately 24.0 to 24.5 percent (unchanged). The effective income tax rate may be affected by unanticipated impacts from changes in international, federal or state tax policies, changes in the Company's geographic mix of pre-tax income, other discrete events, as well as differences from our estimate of the tax benefits associated with employee equity awards and our estimate of the tax impact of various tax initiatives.
Net income is expected to be
Foreign Currency
- Foreign currency translation is anticipated to reduce 2022 net sales growth by approximately 120 basis points.
- Foreign currency is expected to have essentially no impact on earnings as unfavorable foreign currency translation impacts are anticipated to be offset by foreign currency transactional effects from hedging of production.
Balance Sheet and Cash Flows
Operating cash flow is expected to be at least
Capital expenditures are planned to be between
First Half 2022 Financial Commentary
-
Net sales growth of low-teens percent (prior high-teens to low-20 percent), compared to first half 2021. The revision to our first half 2022 net sales outlook is primarily due to the removal of future sales to our
Russia -based distributor and the financial impact of recent mandatory quarantines inChina , related to the continued COVID-19 outbreak in that region. - Gross margin is anticipated to contract approximately 200 basis points (prior over 300 basis points) compared to first half 2021.
- SG&A expenses are anticipated to grow faster than net sales growth, resulting in modest SG&A deleverage (prior was modest leverage).
-
Diluted earnings per share of
$0.93 $1.13 $0.90 $1.10
Conference Call
The Company will hold its first quarter 2022 conference call at
Second Quarter 2022 Reporting Date
Supplemental Financial Information
Since
The non-GAAP financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP. The Company provides a reconciliation of non-GAAP measures to the most directly comparable financial measure calculated in accordance with GAAP. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" table included herein. The non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s expectations, anticipations or beliefs about the Company's ability to realize growth opportunities, full year 2022 net sales, gross margin, SG&A expenses, demand creation spend, operating income, effective income tax rate, net income, diluted earnings per share, weighted average diluted shares outstanding, foreign currency translation, cash flows, and capital expenditures, and first half 2022 net sales, gross margin, SG&A expenses and diluted earnings per share. Forward-looking statements often use words such as "will," "anticipate," "estimate," "expect," "should," "may" and other words and terms of similar meaning or reference future dates. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors," and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. Potential risks and uncertainties include those relating to the impact of the COVID-19 pandemic on our operations; economic conditions, including inflationary pressures; supply chain disruptions, constraints and expenses; labor shortages; changes in consumer behavior and confidence; as well as geopolitical tensions. The Company does not undertake any duty to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
About
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||
(in thousands) |
|
|
|
|
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Short-term investments |
|
175,024 |
|
920 |
Accounts receivable, net |
|
408,186 |
|
338,787 |
Inventories, net |
|
714,415 |
|
525,704 |
Prepaid expenses and other current assets |
|
105,261 |
|
66,173 |
Total current assets |
|
1,838,126 |
|
1,805,225 |
Property, plant and equipment, net |
|
290,070 |
|
300,063 |
Operating lease right-of-use assets |
|
333,356 |
|
363,652 |
Intangible assets, net |
|
101,496 |
|
103,146 |
|
|
68,594 |
|
68,594 |
Deferred income taxes |
|
89,613 |
|
86,825 |
Other non-current assets |
|
66,724 |
|
66,401 |
Total assets |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable |
|
|
|
|
Accrued liabilities |
|
234,326 |
|
224,674 |
Operating lease liabilities |
|
68,136 |
|
81,308 |
Income taxes payable |
|
6,297 |
|
3,431 |
Total current liabilities |
|
571,014 |
|
474,968 |
Non-current operating lease liabilities |
|
321,250 |
|
356,766 |
Income taxes payable |
|
40,299 |
|
50,285 |
Deferred income taxes |
|
— |
|
4,406 |
Other long-term liabilities |
|
36,516 |
|
38,671 |
Total liabilities |
|
969,079 |
|
925,096 |
Total shareholders' equity |
|
1,818,900 |
|
1,868,810 |
Total liabilities and shareholders' equity |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||
|
|
Three Months Ended |
||||
(In thousands, except per share amounts) |
|
2022 |
|
2021 |
||
Net sales |
|
|
|
|
|
|
Cost of sales |
|
383,063 |
|
|
304,204 |
|
Gross profit |
|
378,447 |
|
|
321,402 |
|
Gross margin |
|
49.7 |
% |
|
51.4 |
% |
|
|
|
|
|
||
Selling, general and administrative expenses |
|
299,086 |
|
|
254,389 |
|
Net licensing income |
|
4,305 |
|
|
3,467 |
|
Operating income |
|
83,666 |
|
|
70,480 |
|
Interest income, net |
|
395 |
|
|
278 |
|
Other non-operating income (expense), net |
|
44 |
|
|
(304 |
) |
Income before income tax |
|
84,105 |
|
|
70,454 |
|
Income tax expense |
|
(17,268 |
) |
|
(14,554 |
) |
Net income |
|
|
|
|
|
|
|
|
|
|
|
||
Earnings per share: |
|
|
|
|
||
Basic |
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
||
Basic |
|
64,273 |
|
|
66,363 |
|
Diluted |
|
64,591 |
|
|
66,885 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||
|
|
Three Months Ended |
||||
(in thousands) |
|
2022 |
|
2021 |
||
Cash flows from operating activities: |
|
|
|
|
||
Net income |
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
||
Depreciation, amortization, and non-cash lease expense |
|
30,577 |
|
|
30,459 |
|
Provision for uncollectible accounts receivable |
|
(3,377 |
) |
|
(7,849 |
) |
Loss on disposal or impairment of intangible assets, property, plant and equipment, and right-of-use assets |
|
1,598 |
|
|
131 |
|
Deferred income taxes |
|
2,746 |
|
|
4,577 |
|
Stock-based compensation |
|
5,503 |
|
|
4,874 |
|
Changes in operating assets and liabilities: |
|
|
|
|
||
Accounts receivable |
|
81,220 |
|
|
117,818 |
|
Inventories, net |
|
(71,108 |
) |
|
25,117 |
|
Prepaid expenses and other current assets |
|
(17,604 |
) |
|
(11,150 |
) |
Other assets |
|
(1,443 |
) |
|
51 |
|
Accounts payable |
|
(20,823 |
) |
|
(41,194 |
) |
Accrued liabilities |
|
(81,371 |
) |
|
(27,253 |
) |
Income taxes payable |
|
(11,004 |
) |
|
(19,291 |
) |
Operating lease assets and liabilities |
|
(15,979 |
) |
|
(21,273 |
) |
Other liabilities |
|
440 |
|
|
(18 |
) |
Net cash provided by (used in) operating activities |
|
(33,788 |
) |
|
110,899 |
|
Cash flows from investing activities: |
|
|
|
|
||
Purchases of short-term investments |
|
(44,877 |
) |
|
— |
|
Sales and maturities of short-term investments |
|
984 |
|
|
1,054 |
|
Capital expenditures |
|
(12,885 |
) |
|
(3,896 |
) |
Net cash used in investing activities |
|
(56,778 |
) |
|
(2,842 |
) |
Cash flows from financing activities: |
|
|
|
|
||
Proceeds from credit facilities |
|
— |
|
|
7,753 |
|
Repayments on credit facilities |
|
— |
|
|
(7,532 |
) |
Proceeds from issuance of common stock related to stock-based compensation |
|
2,512 |
|
|
13,772 |
|
Tax payments related to stock-based compensation |
|
(3,959 |
) |
|
(5,358 |
) |
Repurchase of common stock |
|
(217,317 |
) |
|
(11,223 |
) |
Cash dividends paid |
|
(19,151 |
) |
|
(17,285 |
) |
Net cash used in financing activities |
|
(237,915 |
) |
|
(19,873 |
) |
Net effect of exchange rate changes on cash |
|
317 |
|
|
(5,268 |
) |
Net increase (decrease) in cash and cash equivalents |
|
(328,164 |
) |
|
82,916 |
|
Cash and cash equivalents, beginning of period |
|
763,404 |
|
|
790,725 |
|
Cash and cash equivalents, end of period |
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||
Cash paid during the year for income taxes |
|
|
|
|
|
|
Supplemental disclosures of non-cash investing and financing activities: |
|
|
|
|
||
Property, plant and equipment acquired through increase in liabilities |
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures Net Sales Growth - Constant-currency Basis (Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||
|
|
Reported
|
|
Adjust for Foreign Currency |
|
Constant-currency
|
|
Reported
|
|
Reported
|
|
Constant-currency
|
(In millions, except percentage changes) |
|
2022 |
|
Translation |
|
2022(1) |
|
2021 |
|
% Change |
|
% Change(1) |
Geographical |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ — |
|
|
|
|
|
|
|
|
|
|
121.7 |
|
5.5 |
|
127.2 |
|
112.0 |
|
|
|
|
|
|
94.7 |
|
5.7 |
|
100.4 |
|
70.8 |
|
|
|
|
|
|
43.2 |
|
0.1 |
|
43.3 |
|
34.2 |
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand |
|
|
|
|
|
|
|
|
|
|
|
|
Columbia |
|
|
|
|
|
|
|
|
|
|
|
|
SOREL |
|
63.6 |
|
0.4 |
|
64.0 |
|
46.3 |
|
|
|
|
prAna |
|
32.7 |
|
— |
|
32.7 |
|
31.5 |
|
|
|
|
|
|
21.4 |
|
0.2 |
|
21.6 |
|
20.4 |
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Product Category |
|
|
|
|
|
|
|
|
|
|
|
|
Apparel, Accessories and Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
Footwear |
|
195.6 |
|
3.6 |
|
199.2 |
|
156.7 |
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Channel |
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
DTC |
|
353.3 |
|
5.5 |
|
358.8 |
|
290.2 |
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against
View source version on businesswire.com: https://www.businesswire.com/news/home/20220428005891/en/
Vice President of Investor Relations and Strategic Planning
(503) 985-4112
aburns@columbia.com
Source:
FAQ
What were Columbia Sportswear's Q1 2022 sales figures?
How did diluted earnings per share change in Q1 2022 for Columbia Sportswear?
What is the recent stock repurchase activity of Columbia Sportswear?
How did Columbia Sportswear's operating income perform in Q1 2022?
