Carter’s, Inc. Reports First Quarter Fiscal 2023 Results
-
Net sales
$696 million -
Diluted EPS
$0.95 $0.98 -
Returned
$38 million -
Company reaffirms full year fiscal 2023 outlook1:
-
Net sales of
$3.0 billion -
Adjusted operating income of
$350 million -
Adjusted diluted EPS of
$6.15
-
Net sales of
“We exceeded our first quarter sales and earnings objectives,” said
“On-time deliveries of our product offerings sourced from
“As expected, our first quarter sales and earnings were lower than last year. Historic inflation began to meaningfully weigh on families with young children and their demand for our brands last year.
“To mitigate the effects of lower consumer demand, we have focused on reducing discretionary spending and improving price realization, largely driven through better inventory management. As a result, earnings and cash flow from operations exceeded our expectations in the first quarter.
“Given a good start to the year, we are reaffirming our previous guidance for sales and earnings for 2023. With time, we expect inflation will decrease to more acceptable levels, the burden of lower real wages affecting families with young children will moderate, and demand for our brands will improve.
“Carter’s is the best-selling brand in young children’s apparel with unparalleled market share and distribution capabilities. We believe our multi-brand, multi-channel business model, and leading market position in essential core products will enable Carter’s 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 non-GAAP financial measurements 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. Adjustments made to Q1 fiscal 2023 results reflect costs related to organizational restructuring. There were no adjustments to Q1 fiscal 2022 results.
|
Fiscal Quarter Ended |
|||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||
(In millions, except earnings per share) |
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
|
|
Operating
|
|
% Net
|
|
Net
|
|
Diluted
|
||||||||
As reported (GAAP) |
$ |
56.4 |
|
8.1 |
% |
|
$ |
36.0 |
|
$ |
0.95 |
|
|
$ |
102.6 |
|
13.1 |
% |
|
$ |
67.9 |
|
$ |
1.66 |
Organizational restructuring |
|
1.2 |
|
|
|
|
0.9 |
|
|
0.03 |
|
|
|
— |
|
|
|
|
— |
|
|
— |
||
As adjusted |
$ |
57.5 |
|
8.3 |
% |
|
$ |
36.9 |
|
$ |
0.98 |
|
|
$ |
102.6 |
|
13.1 |
% |
|
$ |
67.9 |
|
$ |
1.66 |
Note: Results may not be additive due to rounding. |
||||||||||||||||||||||||
Consolidated Results
First Quarter of Fiscal 2023 compared to First Quarter of Fiscal 2022
Net sales decreased
Operating income decreased
Adjusted operating income (a non-GAAP measure) decreased
Net income decreased
Adjusted net income (a non-GAAP measure) decreased
Net cash provided by operations in the first quarter of 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.
Return of Capital Activity
In the first quarter of fiscal 2023, the Company returned a total of
-
Share repurchases: During the first quarter, the Company repurchased and retired approximately 136 thousand shares of its common stock for
$9.6 million $70.55 April 27, 2023 , the Company repurchased and retired approximately 272 thousand shares for$19.2 million $70.54 April 27, 2023 , the total remaining capacity under the Company’s previously-announced repurchase authorizations was approximately$730 million -
Dividends: In the first quarter, the Company paid a cash dividend of
$0.75 $28.5 million
2023 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 the second quarter of fiscal 2023, the Company expects approximately:
-
$590 million $605 million $700.7 million -
$30 million $35 million $75.4 million -
$0.40 $0.50 $1.30
Our forecast for the second quarter of fiscal 2023 assumes:
-
Shift of previously planned
U.S. Wholesale demand from the second quarter to the first quarter of 2023; - Continued inflationary pressure on consumer demand;
- Improved gross margin, reflecting lower inventory-related costs and lower inbound freight costs;
- Comparable SG&A;
- Higher interest expense and tax rate; and
- Lower shares outstanding.
For fiscal year 2023, the Company is reaffirming its prior guidance and projects approximately:
-
$3.0 billion $3,212.7 million -
$350 million $388.2 million -
$6.15 $6.90 -
Operating cash flow of over
$300 million -
Capital expenditures of approximately
$75 million
Our forecast for fiscal year 2023 assumes:
- Improvement in demand trend as inflation moderates;
- Gross margin expansion, driven by lower transportation costs, improved price realization, and favorable changes in channel mix;
- Comparable SG&A;
- Higher interest expense and tax rate; and
- Lower shares outstanding.
Our adjusted operating income and diluted earnings per share outlooks for fiscal year 2023 exclude a pre-tax net charge of
Conference Call
The Company will hold a conference call with investors to discuss first quarter 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 of young children’s apparel 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 Annual Report on Form 10-K for the fiscal year ended
CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share data) (unaudited) |
|||||||
|
Fiscal Quarter Ended |
||||||
|
|
|
|
||||
Net sales |
$ |
695,880 |
|
|
$ |
781,284 |
|
Cost of goods sold |
|
386,413 |
|
|
|
426,242 |
|
Gross profit |
|
309,467 |
|
|
|
355,042 |
|
Royalty income, net |
|
6,519 |
|
|
|
7,474 |
|
Selling, general, and administrative expenses |
|
259,632 |
|
|
|
259,893 |
|
Operating income |
|
56,354 |
|
|
|
102,623 |
|
Interest expense |
|
9,644 |
|
|
|
15,132 |
|
Interest income |
|
(700 |
) |
|
|
(338 |
) |
Other income, net |
|
(258 |
) |
|
|
(512 |
) |
Income before income taxes |
|
47,668 |
|
|
|
88,341 |
|
Income tax provision |
|
11,672 |
|
|
|
20,408 |
|
Net income |
$ |
35,996 |
|
|
$ |
67,933 |
|
|
|
|
|
||||
Basic net income per common share |
$ |
0.95 |
|
|
$ |
1.66 |
|
Diluted net income per common share |
$ |
0.95 |
|
|
$ |
1.66 |
|
Dividend declared and paid per common share |
$ |
0.75 |
|
|
$ |
0.75 |
|
CARTER’S, INC. BUSINESS SEGMENT RESULTS (dollars in thousands) (unaudited) |
|||||||||||||
|
Fiscal Quarter Ended |
||||||||||||
|
|
|
% of
|
|
|
|
% of
|
||||||
Net sales: |
|
|
|
|
|
|
|
||||||
|
$ |
323,721 |
|
|
46.5 |
% |
|
$ |
366,358 |
|
|
46.9 |
% |
|
|
279,990 |
|
|
40.3 |
% |
|
|
307,301 |
|
|
39.3 |
% |
International |
|
92,169 |
|
|
13.2 |
% |
|
|
107,625 |
|
|
13.8 |
% |
Consolidated net sales |
$ |
695,880 |
|
|
100.0 |
% |
|
$ |
781,284 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
||||||
Operating income: |
|
|
% of
|
|
|
|
% of
|
||||||
|
$ |
26,939 |
|
|
8.3 |
% |
|
$ |
49,994 |
|
|
13.6 |
% |
|
|
52,092 |
|
|
18.6 |
% |
|
|
60,506 |
|
|
19.7 |
% |
International |
|
3,124 |
|
|
3.4 |
% |
|
|
10,388 |
|
|
9.7 |
% |
Corporate expenses(*) |
|
(25,801 |
) |
|
n/a |
|
|
|
(18,265 |
) |
|
n/a |
|
Consolidated operating income |
$ |
56,354 |
|
|
8.1 |
% |
|
$ |
102,623 |
|
|
13.1 |
% |
(*) |
Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting fees, and audit fees. |
|
Fiscal Quarter Ended |
|||||||
(dollars in millions) |
|
|
|
|
International |
|||
Organizational restructuring(*) |
$ |
(0.8) |
|
$ |
(0.5) |
|
$ |
(0.1) |
(*) |
Relates to gains for organizational restructuring and related corporate office lease amendment actions. Additionally, the first fiscal quarter ended |
CARTER’S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) (unaudited) |
|||||||||||
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
||||||
Current assets: |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
157,685 |
|
|
$ |
211,748 |
|
|
$ |
702,266 |
|
Accounts receivable, net of allowance for credit losses of |
|
223,939 |
|
|
|
198,587 |
|
|
|
265,694 |
|
Finished goods inventories, net of inventory reserves of |
|
613,921 |
|
|
|
744,573 |
|
|
|
679,729 |
|
Prepaid expenses and other current assets (*) |
|
47,173 |
|
|
|
33,812 |
|
|
|
51,186 |
|
Total current assets |
|
1,042,718 |
|
|
|
1,188,720 |
|
|
|
1,698,875 |
|
Property, plant, and equipment, net of accumulated depreciation of |
|
180,383 |
|
|
|
189,822 |
|
|
|
197,515 |
|
Operating lease assets |
|
494,969 |
|
|
|
492,335 |
|
|
|
469,354 |
|
Tradenames, net |
|
298,331 |
|
|
|
298,393 |
|
|
|
307,581 |
|
|
|
209,601 |
|
|
|
209,333 |
|
|
|
212,518 |
|
Customer relationships, net |
|
29,801 |
|
|
|
30,564 |
|
|
|
33,151 |
|
Other assets |
|
27,524 |
|
|
|
30,548 |
|
|
|
29,084 |
|
Total assets |
$ |
2,283,327 |
|
|
$ |
2,439,715 |
|
|
$ |
2,948,078 |
|
|
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
||||||
Current liabilities: |
|
|
|
|
|
||||||
Accounts payable |
$ |
180,181 |
|
|
$ |
264,078 |
|
|
$ |
284,034 |
|
Current portion of long-term debt, net |
|
— |
|
|
|
— |
|
|
|
495,743 |
|
Current operating lease liabilities (*) |
|
139,350 |
|
|
|
142,432 |
|
|
|
133,620 |
|
Other current liabilities |
|
91,104 |
|
|
|
122,439 |
|
|
|
111,078 |
|
Total current liabilities |
|
410,635 |
|
|
|
528,949 |
|
|
|
1,024,475 |
|
|
|
|
|
|
|
||||||
Long-term debt, net |
|
576,803 |
|
|
|
616,624 |
|
|
|
496,104 |
|
Deferred income taxes |
|
46,090 |
|
|
|
41,235 |
|
|
|
48,450 |
|
Long-term operating lease liabilities |
|
417,012 |
|
|
|
421,741 |
|
|
|
419,493 |
|
Other long-term liabilities |
|
34,894 |
|
|
|
34,757 |
|
|
|
44,266 |
|
Total liabilities |
$ |
1,485,434 |
|
|
$ |
1,643,306 |
|
|
$ |
2,032,788 |
|
|
|
|
|
|
|
||||||
Commitments and contingencies |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Stockholders' equity: |
|
|
|
|
|
||||||
Preferred stock; par value |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common stock, voting; par value |
|
378 |
|
|
|
377 |
|
|
|
406 |
|
Additional paid-in capital |
|
— |
|
|
|
— |
|
|
|
— |
|
Accumulated other comprehensive loss |
|
(30,412 |
) |
|
|
(34,338 |
) |
|
|
(26,115 |
) |
Retained earnings |
|
827,927 |
|
|
|
830,370 |
|
|
|
940,999 |
|
Total stockholders' equity |
|
797,893 |
|
|
|
796,409 |
|
|
|
915,290 |
|
Total liabilities and stockholders' equity |
$ |
2,283,327 |
|
|
$ |
2,439,715 |
|
|
$ |
2,948,078 |
|
(*) |
Prepaid expense and other current assets and Current operating lease liabilities as of |
CARTER’S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) |
|||||||
|
Fiscal Quarter Ended |
||||||
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
35,996 |
|
|
$ |
67,933 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
||||
Depreciation of property, plant, and equipment |
|
14,799 |
|
|
|
13,282 |
|
Amortization of intangible assets |
|
939 |
|
|
|
932 |
|
Recoveries of excess and obsolete inventory, net |
|
(1,256 |
) |
|
|
(3,109 |
) |
Gain on partial termination of corporate lease |
|
(4,366 |
) |
|
|
— |
|
Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries |
|
2,632 |
|
|
|
190 |
|
Amortization of debt issuance costs |
|
393 |
|
|
|
787 |
|
Stock-based compensation expense |
|
4,343 |
|
|
|
5,859 |
|
Unrealized foreign currency exchange gain, net |
|
(240 |
) |
|
|
(189 |
) |
Provisions for (recoveries of) doubtful accounts receivable from customers |
|
235 |
|
|
|
(1,513 |
) |
Unrealized (gain) loss on investments |
|
(433 |
) |
|
|
935 |
|
Deferred income taxes |
|
5,031 |
|
|
|
7,759 |
|
Effect of changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(24,944 |
) |
|
|
(32,484 |
) |
Finished goods inventories |
|
134,147 |
|
|
|
(27,720 |
) |
Prepaid expenses and other assets (1) |
|
(12,678 |
) |
|
|
(42 |
) |
Accounts payable and other liabilities (1) |
|
(112,401 |
) |
|
|
(196,427 |
) |
Net cash provided by (used in) operating activities |
$ |
42,197 |
|
|
$ |
(163,807 |
) |
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Capital expenditures |
$ |
(13,827 |
) |
|
$ |
(7,652 |
) |
Net cash used in investing activities |
$ |
(13,827 |
) |
|
$ |
(7,652 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Payment of debt issuance costs |
$ |
— |
|
|
$ |
(3 |
) |
Payments on secured revolving credit facility |
|
(40,000 |
) |
|
|
— |
|
Repurchases of common stock |
|
(9,586 |
) |
|
|
(74,496 |
) |
Dividends paid |
|
(28,483 |
) |
|
|
(30,573 |
) |
Withholdings from vesting of restricted stock |
|
(4,776 |
) |
|
|
(6,623 |
) |
Proceeds from exercises of stock options |
|
83 |
|
|
|
222 |
|
Net cash used in financing activities |
$ |
(82,762 |
) |
|
$ |
(111,473 |
) |
|
|
|
|
||||
Net effect of exchange rate changes on cash and cash equivalents |
|
329 |
|
|
|
904 |
|
Net decrease in cash and cash equivalents |
$ |
(54,063 |
) |
|
$ |
(282,028 |
) |
Cash and cash equivalents, beginning of period |
|
211,748 |
|
|
|
984,294 |
|
Cash and cash equivalents, end of period |
$ |
157,685 |
|
|
$ |
702,266 |
|
(1) |
Cash flows for the fiscal quarter |
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) |
$ |
309.5 |
|
44.5 |
% |
|
$ |
259.6 |
|
|
37.3 |
% |
|
$ |
56.4 |
|
8.1 |
% |
|
$ |
11.7 |
|
$ |
36.0 |
|
|
0.95 |
Organizational restructuring (b) |
|
— |
|
|
|
|
(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 |
|
Fiscal Quarter Ended |
||||||||||||||||||||||||||
|
Gross
|
|
% Net
|
|
SG&A |
|
% Net
|
|
Operating
|
|
% Net
|
|
Income
|
|
Net
|
|
Diluted
|
||||||||||
As reported (GAAP) |
$ |
331.2 |
|
47.3 |
% |
|
$ |
261.4 |
|
37.3 |
% |
|
$ |
75.4 |
|
10.8 |
% |
|
$ |
10.1 |
|
$ |
37.0 |
|
$ |
0.93 |
|
Loss on extinguishment of debt (c) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4.8 |
|
|
15.2 |
|
|
0.38 |
||||
As adjusted (a) |
$ |
331.2 |
|
47.3 |
% |
|
$ |
261.4 |
|
37.3 |
% |
|
$ |
75.4 |
|
10.8 |
% |
|
$ |
14.9 |
|
$ |
52.1 |
|
$ |
1.30 |
|
|
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 (c) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
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 |
|
(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. 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) |
Net expenses related to organizational restructuring and related corporate office lease amendment actions. |
(c) |
Related to the redemption of the |
(d) |
Related to the write-down of the Skip Hop tradename asset. |
Note: No adjustments were made to GAAP results in the first quarter of fiscal 2022. Results may not be additive due to rounding. |
CARTER’S, INC. RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS (unaudited) |
|||||||
|
Fiscal Quarter Ended |
||||||
|
|
|
|
||||
Weighted-average number of common and common equivalent shares outstanding: |
|
|
|
||||
Basic number of common shares outstanding |
|
37,104,527 |
|
|
|
40,270,895 |
|
Dilutive effect of equity awards |
|
8,063 |
|
|
|
77,437 |
|
Diluted number of common and common equivalent shares outstanding |
|
37,112,590 |
|
|
|
40,348,332 |
|
As reported on a GAAP Basis: |
|
|
|
||||
(dollars in thousands, except per share data) |
|
|
|
||||
Basic net income per common share: |
|
|
|
||||
Net income |
$ |
35,996 |
|
|
$ |
67,933 |
|
Income allocated to participating securities |
|
(576 |
) |
|
|
(921 |
) |
Net income available to common shareholders |
$ |
35,420 |
|
|
$ |
67,012 |
|
Basic net income per common share |
$ |
0.95 |
|
|
$ |
1.66 |
|
Diluted net income per common share: |
|
|
|
||||
Net income |
$ |
35,996 |
|
|
$ |
67,933 |
|
Income allocated to participating securities |
|
(576 |
) |
|
|
(920 |
) |
Net income available to common shareholders |
$ |
35,420 |
|
|
$ |
67,013 |
|
Diluted net income per common share |
$ |
0.95 |
|
|
$ |
1.66 |
|
As adjusted (a): |
|
|
|
||||
Basic net income per common share: |
|
|
|
||||
Net income |
$ |
36,879 |
|
|
$ |
67,933 |
|
Income allocated to participating securities |
|
(592 |
) |
|
|
(921 |
) |
Net income available to common shareholders |
$ |
36,287 |
|
|
$ |
67,012 |
|
Basic net income per common share |
$ |
0.98 |
|
|
$ |
1.66 |
|
Diluted net income per common share: |
|
|
|
||||
Net income |
$ |
36,879 |
|
|
$ |
67,933 |
|
Income allocated to participating securities |
|
(592 |
) |
|
|
(920 |
) |
Net income available to common shareholders |
$ |
36,287 |
|
|
$ |
67,013 |
|
Diluted net income per common share |
$ |
0.98 |
|
|
$ |
1.66 |
|
(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 |
Note: Results may not be additive due to rounding. |
RECONCILIATION OF ADJUSTED RESULTS TO GAAP (dollars in millions) (unaudited) |
||||||||||||
The following table provides a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated: |
||||||||||||
|
|
Fiscal Quarter Ended |
|
Four Fiscal Quarters Ended |
||||||||
|
|
|
|
|
|
|
||||||
Net income |
|
$ |
36.0 |
|
|
$ |
67.9 |
|
|
$ |
218.1 |
|
Interest expense |
|
|
9.6 |
|
|
|
15.1 |
|
|
|
37.3 |
|
Interest income |
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
(1.6 |
) |
Income tax provision |
|
|
11.7 |
|
|
|
20.4 |
|
|
|
58.0 |
|
Depreciation and amortization |
|
|
15.7 |
|
|
|
14.2 |
|
|
|
66.8 |
|
EBITDA |
|
$ |
72.4 |
|
|
$ |
117.3 |
|
|
$ |
378.5 |
|
|
|
|
|
|
|
|
||||||
Adjustments to EBITDA |
|
|
|
|
|
|
||||||
Organizational restructuring (a) |
|
$ |
1.2 |
|
|
$ |
— |
|
|
$ |
1.2 |
|
Loss on extinguishment of debt (b) |
|
|
— |
|
|
|
— |
|
|
|
19.9 |
|
Intangible asset impairment (c) |
|
|
— |
|
|
|
— |
|
|
|
9.0 |
|
Total adjustments |
|
|
1.2 |
|
|
|
— |
|
|
|
30.1 |
|
Adjusted EBITDA |
|
$ |
73.5 |
|
|
$ |
117.3 |
|
|
$ |
408.6 |
|
(a) |
Net expenses related to organizational restructuring and related corporate office lease amendment actions. |
(b) |
Related to the redemption of the |
(c) |
Related to the write-down of the Skip Hop tradename asset. |
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 footnotes (a) - (c) 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. These measures also afford investors a view of what management considers to be the Company's core 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 GAAP AND NON-GAAP INFORMATION (dollars in millions) (unaudited) |
||||||||||||||||||
The table below reflects the calculation of constant currency net sales on a consolidated and International segment basis for the fiscal quarter ended |
||||||||||||||||||
|
Fiscal Quarter Ended |
|||||||||||||||||
|
Reported Net
|
|
Impact of
|
|
Constant-
|
|
Reported Net
|
|
Reported
|
|
Constant-
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consolidated net sales |
$ |
695.9 |
|
$ |
(2.2 |
) |
|
$ |
698.0 |
|
$ |
781.3 |
|
(10.9 |
)% |
|
(10.7 |
)% |
International segment net sales |
$ |
92.2 |
|
$ |
(2.2 |
) |
|
$ |
94.3 |
|
$ |
107.6 |
|
(14.4 |
)% |
|
(12.3 |
)% |
| 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/20230427006005/en/
Vice President & Treasurer
(678) 791-7615
Source: Carter’s, Inc
