- Net sales $724 million, growth of
6%
- Operating income $93 million, growth
of 10%; adjusted operating income $94 million, growth of
8%
- Diluted EPS $1.04, growth of 11%;
adjusted diluted EPS $1.05, growth of 8%
- Returned $89 million to shareholders
through share repurchases and dividends
- Company raises fiscal 2016 adjusted
diluted EPS guidance range to growth of 10% - 12%; previously
growth of 8% - 10%
Carter’s, Inc. (NYSE:CRI), the largest branded marketer in the
United States and Canada of apparel exclusively for babies and
young children, today reported its first quarter fiscal 2016
results.
“We saw increased demand for our brands and achieved a record
level of sales and earnings in our first quarter,” said Michael D.
Casey, Chairman and Chief Executive Officer. “We achieved good
growth in our wholesale, retail and international businesses, and
meaningfully increased the distribution of capital to our
shareholders. We’re forecasting good growth in sales and earnings
for the year, and have raised our earnings guidance for 2016.”
Consolidated Results (First Quarter of Fiscal 2016 compared
to First Quarter of Fiscal 2015)
Net sales increased $39.3 million, or 5.7%, to $724.1 million,
reflecting growth in the Company’s U.S. Carter’s and OshKosh retail
and Carter’s wholesale businesses as well as in its international
segment. Changes in foreign currency exchange rates in the first
quarter of fiscal 2016 compared to the first quarter of fiscal 2015
negatively impacted consolidated net sales in the first quarter of
fiscal 2016 by $4.5 million, or 0.7%. On a constant currency basis,
consolidated net sales increased 6.4% in the first quarter of
fiscal 2016.
Operating income in the first quarter of fiscal 2016 increased
$8.5 million, or 10.1%, to $93.0 million, compared to $84.5 million
in the first quarter of fiscal 2015. Operating margin increased
approximately 50 basis points to 12.8%, compared to 12.3% in the
first quarter of fiscal 2015. Adjusted operating income (a non-GAAP
measure) increased $6.7 million, or 7.7%, to $94.0 million,
compared to $87.3 million in the first quarter of fiscal 2015.
Adjusted operating margin (a non-GAAP measure) increased
approximately 30 basis points to 13.0%, compared to 12.7% in the
first quarter of fiscal 2015, which reflected improved gross margin
partially offset by expense deleverage.
Net income in the first quarter of fiscal 2016 increased $4.2
million, or 8.4%, to $54.0 million, or $1.04 per diluted share,
compared to $49.8 million, or $0.94 per diluted share, in the first
quarter of fiscal 2015. Adjusted net income (a non-GAAP measure)
increased $2.9 million, or 5.5%, to $54.6 million, compared to
$51.7 million in the first quarter of fiscal 2015. Adjusted
earnings per diluted share (a non-GAAP measure) in the first
quarter of fiscal 2016 increased 7.9% to $1.05, compared to $0.97
in the first quarter of fiscal 2015.
Cash flow from operations in the first quarter of fiscal 2016
was $128.3 million compared to $87.2 million in the first quarter
of fiscal 2015. The increase reflected an increase in net income
and favorable changes in net working capital.
See the “Reconciliation of GAAP to Adjusted Results” section of
this release for additional disclosures and reconciliations
regarding non-GAAP measures.
Business Segment Results (First Quarter of Fiscal 2016
compared to First Quarter of Fiscal 2015)
Carter’s Retail Segment
Carter’s retail segment sales increased $14.6 million, or 5.7%,
to $272.3 million. Carter’s retail comparable sales decreased 0.1%,
comprised of eCommerce comparable sales growth of 15.2%, offset by
a stores comparable sales decline of 4.0%. During the first quarter
of fiscal 2016, the Company believes, based on analysis of credit
card transactions and other data, that Carter’s retail comparable
sales were negatively affected by lower demand from international
consumers shopping in its U.S. stores and on its websites, which
was likely influenced by the strength of the U.S. dollar relative
to other global currencies.
In the first quarter of fiscal 2016, the Company opened 16
Carter’s stores in the United States. The Company operated 610
Carter’s stores in the United States as of April 2, 2016.
Carter’s Wholesale Segment
Carter’s wholesale segment net sales increased $10.8 million, or
4.0%, to $280.1 million, reflecting increased product demand, in
part due to timing of orders, and a new playwear initiative.
OshKosh Retail Segment
OshKosh retail segment net sales increased $8.7 million, or
11.9%, to $81.8 million. OshKosh retail comparable sales increased
2.7%, comprised of eCommerce comparable sales growth of 19.8%,
partially offset by a stores comparable sales decline of 1.9%.
During the first quarter of fiscal 2016, the Company believes,
based on analysis of credit card transactions and other data, that
OshKosh retail comparable sales were negatively affected by lower
demand from international consumers shopping in its U.S. stores and
on its websites, which was likely influenced by the strength of the
U.S. dollar relative to other global currencies.
In the first quarter of fiscal 2016, the Company opened 11
OshKosh stores in the United States and closed one store. The
Company operated 251 OshKosh stores in the United States as of
April 2, 2016.
OshKosh Wholesale Segment
OshKosh wholesale segment net sales decreased $4.1 million, or
25.8%, to $11.9 million, due to a decrease in the number of units
shipped, driven mainly by lower seasonal bookings.
International Segment
International segment net sales increased $9.3 million, or
13.6%, to $77.9 million, driven by growth in the Company’s retail
businesses in Canada and new eCommerce sales in China, partially
offset by unfavorable foreign currency exchange rates.
Changes in foreign currency exchange rates in the first quarter
of fiscal 2016 compared to the first quarter of fiscal 2015
negatively affected international segment net sales in the first
quarter of fiscal 2016 by $4.5 million, or 6.6%. On a constant
currency basis, international segment net sales increased
20.1%.
For the first quarter of fiscal 2016, Canada retail comparable
sales increased 14.9%, comprised of stores comparable sales growth
of 12.8% and eCommerce comparable sales growth of 46.6%. In the
first quarter of fiscal 2016, the Company opened two stores in
Canada. The Company operated 149 stores in Canada as of
April 2, 2016.
Return of Capital
In the first quarter of fiscal 2016, the Company returned a
total of $88.6 million to shareholders through share repurchases
and dividends as described below.
During the first quarter of fiscal 2016, the Company repurchased
and retired 722,364 shares of its common stock for $71.6 million at
an average price of $99.07 per share. Year-to-date through April
27, 2016, the Company repurchased and retired a total of 1,241,174
shares for $125.5 million at an average price of $101.09 per share.
All shares were repurchased in open market transactions pursuant to
applicable regulations for such transactions. As of April 27, 2016,
the total remaining capacity under the Company’s previously
announced repurchase authorizations was approximately $449
million.
During the first quarter of fiscal 2016, the Company paid a cash
dividend of $0.33 per share totaling $17.0 million. Future
declarations of quarterly dividends and the establishment of
related record and payment dates will be at the discretion of the
Company’s Board of Directors based on a number of factors,
including the Company’s future financial performance and other
considerations.
2016 Business Outlook
For the second quarter of fiscal 2016, the Company projects net
sales will increase approximately 3% to 4% compared to the second
quarter of fiscal 2015 and adjusted diluted earnings per share will
decrease approximately 10% to 15% compared to adjusted diluted
earnings per share of $0.73 in the second quarter of fiscal 2015.
This forecast for second quarter fiscal 2016 adjusted earnings per
share excludes anticipated expenses of approximately $0.8 million
related to the amortization of acquired tradenames and other items
the Company believes to be non-representative of underlying
business performance.
For the first half of fiscal 2016, the Company projects net
sales will increase approximately 4% to 5% compared to the first
half of fiscal 2015 and adjusted diluted earnings per share will be
approximately comparable to adjusted diluted earnings per share of
$1.70 in the first half of fiscal 2015. This forecast for the first
half of fiscal 2016 adjusted earnings per share excludes
anticipated expenses of approximately $1.7 million related to the
amortization of acquired tradenames and other items the Company
believes to be non-representative of underlying business
performance.
For fiscal 2016, the Company projects net sales will increase
approximately 6% to 7% compared to fiscal 2015 and adjusted diluted
earnings per share will increase approximately 10% to 12% compared
to adjusted diluted earnings per share of $4.61 in fiscal 2015.
This forecast for fiscal 2016 adjusted earnings per share excludes
anticipated expenses of approximately $1.7 million related to the
amortization of acquired tradenames and other items the Company
believes to be non-representative of underlying business
performance.
Conference Call
The Company will hold a conference call with investors to
discuss first quarter fiscal 2016 results and its business outlook
on April 28, 2016 at 8:30 a.m. Eastern Daylight Time. To
participate in the call, please dial 913-312-0848. To listen to a
live broadcast via the internet, please visit www.carters.com and
select the “Q1 Quarter 2016 Earnings Conference Call” link under
the “Investor Relations” tab. Presentation materials for the call
can be accessed under the same tab by selecting the link for “News
& Events” followed by “Webcasts & Presentations”. A replay
of the call will be available shortly after the broadcast through
May 7, 2016, at 888-203-1112 (U.S. / Canada) or 719-457-0820
(international), passcode 3540107. The replay will also be archived
on the Company’s website under the “Investor Relations” tab.
About Carter’s, Inc.
Carter’s, Inc. is the largest branded marketer in the United
States and Canada of apparel and related products exclusively for
babies and young children. The Company owns the Carter’s and
OshKosh B’gosh brands, two of the most recognized brands in the
marketplace. These brands are sold in leading department stores,
national chains, and specialty retailers domestically and
internationally. They are also sold through more than 1,000
Company-operated stores in the United States and Canada and on-line
at www.carters.com, www.oshkoshbgosh.com, and
www.cartersoshkosh.ca. The Company’s Just One You, Precious Firsts,
and Genuine Kids brands are available at Target, and its Child of
Mine brand is available at Walmart. Carter’s is headquartered in
Atlanta, Georgia. Additional information may be found at
www.carters.com.
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 2016 and fiscal year 2016, or any other future
period, assessments 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 not
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated,
estimated, or projected. Certain of the risks and uncertainties
that could cause actual results and performance to differ
materially are described in the Company’s most recently filed
Annual Report on Form 10-K and other reports filed with the
Securities and Exchange Commission from time to time under the
headings “Risk Factors” and “Forward-Looking Statements.” Included
among the risks and uncertainties that may impact future results
are the risks of: losing one or more major customers, vendors, or
licensees, due to competition, inadequate quality of the Company’s
products, or otherwise; financial difficulties for one or more of
the Company’s major customers, vendors, or licensees, or an overall
decrease in consumer spending; fluctuations in foreign currency
exchange rates; our products not being accepted in the marketplace,
due to quality concerns, changes in consumer preference and fashion
trends, or otherwise; negative publicity, including as a result of
product recalls or otherwise; failure to protect the Company’s
intellectual property; various types of litigation, including class
action litigation brought under various consumer protection,
employment, and privacy and information security laws; a breach of
the Company’s consumer databases, systems or processes; the risk of
slow-downs, disruptions or strikes along the Company’s supply
chain, including disruptions resulting from foreign supply sources,
the Company’s distribution centers, or in-sourcing capabilities;
unsuccessful expansion into international markets or failure to
successfully manage legal, regulatory, political and economic risks
of the Company’s existing international operations, including
maintaining compliance with worldwide anti-bribery laws; and an
inability to obtain additional financing on favorable terms. The
Company does not undertake any obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(dollars in thousands, except for share
data)
(unaudited)
Fiscal quarter ended
April 2, 2016 April 4, 2015 Net
sales $ 724,085 $ 684,764 Cost of goods sold 413,156 400,712
Gross profit 310,929 284,052 Selling, general, and
administrative expenses 228,996 211,183 Royalty income (11,075 )
(11,636 ) Operating income 93,008 84,505 Interest expense 6,739
6,692 Interest income (207 ) (137 ) Other expense, net 3,193
1,962 Income before income taxes 83,283 75,988 Provision for
income taxes 29,303 26,196 Net income $ 53,980
$ 49,792 Basic net income per common share $ 1.05 $
0.94 Diluted net income per common share $ 1.04 $ 0.94 Dividend
declared and paid per common share $ 0.33 $ 0.22
CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(dollars in thousands)
(unaudited)
Fiscal quarter ended
% of
% of April 2, Total Net April 4,
Total Net 2016 Sales 2015 Sales
Net sales: Carter’s Wholesale $ 280,140 38.7 %
$ 269,315 39.3 % Carter’s Retail (a) 272,323 37.6 % 257,727
37.7 % Total Carter’s 552,463 76.3 % 527,042
77.0 % OshKosh Retail (a) 81,766 11.3 % 73,042 10.7 % OshKosh
Wholesale 11,914 1.6 % 16,051 2.3 % Total OshKosh
93,680 12.9 % 89,093 13.0 % International (b) 77,942
10.8 % 68,629 10.0 % Total net sales $ 724,085
100.0 % $ 684,764 100.0 %
% of % of
Segment Segment Operating income (loss):
Net Sales Net Sales Carter’s Wholesale $ 66,205 23.6
% $ 57,931 21.5 % Carter’s Retail (a) 41,254 15.1 % 44,493
17.3 % Total Carter’s 107,459 19.5 % 102,424
19.4 % OshKosh Retail (a) (1,785 ) (2.2 )% (960 ) (1.3 )% OshKosh
Wholesale 2,206 18.5 % 2,979 18.6 % Total OshKosh 421
0.4 % 2,019 2.3 % International (b) (c) 8,441
10.8 % 6,511 9.5 % Corporate expenses (d) (e) (23,313 )
(26,449 ) Total operating income $ 93,008 12.8 % $ 84,505
12.3 %
(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 related to the Company's 2011
acquisition of Bonnie Togs of approximately $0.5 million for the
fiscal quarter ended April 4, 2015.
(d) Corporate expenses include expenses related to incentive
compensation, stock-based compensation, executive management,
severance and relocation, finance, building occupancy, information
technology, legal, consulting, and audit fees.
(e) Includes charges related to the amortization of tradenames
of $1.0 million for the fiscal quarter ended April 2, 2016,
and $2.3 million for the fiscal quarter ended April 4,
2015.
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in thousands, except for share
data)
(unaudited)
April 2, 2016
January 2, 2016 April
4, 2015 ASSETS Current assets: Cash and cash equivalents
$ 395,141 $ 381,209 $ 377,400 Accounts receivable, net 192,569
207,570 195,593 Finished goods inventories 376,499 469,934 358,014
Prepaid expenses and other current assets 36,791 37,815 33,894
Deferred income taxes 31,841 34,080 32,842
Total current assets 1,032,841 1,130,608 997,743 Property, plant,
and equipment, net of accumulated depreciation of $307,449,
$290,636, and $257,394, respectively 377,273 371,704 341,658
Tradenames and other intangibles, net 309,853 310,848 314,955
Goodwill 177,238 174,874 178,859 Other assets 15,258 15,620
13,898 Total assets $ 1,912,463 $ 2,003,654
$ 1,847,113
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 90,387 $ 157,648
$ 94,133 Other current liabilities 102,494 105,070
93,403 Total current liabilities 192,881 262,718 187,536
Long-term debt, net 580,319 578,972 580,273 Deferred income
taxes 128,815 128,838 120,274 Other long-term liabilities 161,731
158,075 153,317 Total liabilities 1,063,746
1,128,603 1,041,400 Commitments and contingencies
Stockholders' equity: Preferred stock; par value $.01 per share;
100,000 shares authorized; none issued or outstanding at April 2,
2016, January 2, 2016, and April 4, 2015 — — — Common stock,
voting; par value $.01 per share; 150,000,000 shares authorized;
51,206,395, 51,764,309, and 52,615,316 shares issued and
outstanding at April 2, 2016, January 2, 2016 and April 4, 2015,
respectively 512 518 526 Additional paid-in capital — — —
Accumulated other comprehensive loss (31,081 ) (36,367 ) (29,031 )
Retained earnings 879,286 910,900 834,218
Total stockholders' equity 848,717 875,051 805,713
Total liabilities and stockholders' equity $ 1,912,463
$ 2,003,654 $ 1,847,113
CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(dollars in thousands)
(unaudited)
Fiscal quarter ended
April 2, 2016 April 4, 2015 Cash
flows from operating activities: Net income $ 53,980 $ 49,792
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 17,177 14,875
Amortization of tradenames 995 2,325 Accretion of contingent
consideration — 483 Amortization of debt issuance costs 361 280
Non-cash stock-based compensation expense 4,556 4,740 Unrealized
foreign currency exchange loss, net 3,780 1,652 Income tax benefit
from stock-based compensation (3,144 ) (5,771 ) Loss on disposal of
property, plant, and equipment 192 52 Deferred income taxes 2,226
2,207 Effect of changes in operating assets and liabilities:
Accounts receivable, net 15,247 (11,402 ) Finished goods
inventories 96,056 83,349 Prepaid expenses and other assets (576 )
(472 ) Accounts payable and other liabilities (62,568 ) (54,886 )
Net cash provided by operating activities 128,282 87,224
Cash flows from investing activities: Capital
expenditures (25,552 ) (20,760 ) Proceeds from sale of property,
plant, and equipment — 76 Net cash used in investing
activities (25,552 ) (20,684 ) Cash flows from financing
activities: Borrowings under secured revolving credit facility —
20,349 Payments on secured revolving credit facility — (20,000 )
Repurchase of common stock (71,561 ) (14,120 ) Dividends paid
(17,032 ) (11,597 ) Income tax benefit from stock-based
compensation 3,144 5,771 Withholdings from vesting of restricted
stock (8,454 ) (12,331 ) Proceeds from exercise of stock options
3,747 2,768 Net cash used in financing activities
(90,156 ) (29,160 ) Effect of exchange rate changes on cash
and cash equivalents 1,358 (618 ) Net increase in cash and
cash equivalents 13,932 36,762 Cash and cash equivalents, beginning
of period 381,209 340,638 Cash and cash equivalents,
end of period $ 395,141 $ 377,400
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED
RESULTS
(dollars in millions, except earnings per
share)
(unaudited)
Fiscal Quarter Ended April 2,
2016 Gross % Net
% Net
Operating % Net
Net Diluted
Margin Sales SG&A Sales
Income Sales Income EPS As reported
(GAAP) $ 310.9 42.9 % $ 229.0 31.6 % $ 93.0 12.8 % $ 54.0 $
1.04 Amortization of tradenames — (1.0 ) 1.0 0.6
0.01
As adjusted (a) $ 310.9 42.9 % $ 228.0
31.5 % $ 94.0 13.0 % $ 54.6 $ 1.05
Fiscal Quarter Ended April 4, 2015 Gross %
Net % Net Operating % Net Net
Diluted Margin Sales SG&A
Sales Income Sales Income EPS
As reported (GAAP) $ 284.1 41.5 % $ 211.2 30.8 % $ 84.5 12.3
% $ 49.8 $ 0.94 Amortization of tradenames — (2.3 ) 2.3 1.5 0.03
Revaluation of contingent consideration (b) — (0.5 ) 0.5
0.5 0.01
As adjusted (a) $ 284.1 41.5 %
$ 208.4 30.4 % $ 87.3 12.7 % $ 51.7 $ 0.97
(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 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.
(b) Revaluation of the contingent consideration liability
associated with the Company’s acquisition of Bonnie Togs in
2011.
Note: Results may not be additive due to rounding.
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED
RESULTS
(dollars in millions, except earnings per
share)
(unaudited)
Fiscal quarter ended July 4,
2015 Gross
Operating
Margin SG&A Income Net Income
Diluted EPS As reported (GAAP) $ 262.9 $ 209.3 $ 62.0
$ 36.1 $ 0.68 Amortization of tradenames — (2.1 ) 2.1 1.3 0.02
Revaluation of contingent consideration
(a)
— (1.4 ) 1.4 1.4 0.03
As adjusted (b) $
262.9 $ 205.8 $ 65.4 $ 38.8 $ 0.73
Two fiscal quarters ended July 4, 2015
Gross Operating Margin SG&A
Income Net Income Diluted EPS As reported
(GAAP) $ 546.9 $ 420.5 $ 146.5 $ 85.9 $ 1.62 Amortization of
tradenames — (4.3 ) 4.3 2.7 0.05 Revaluation of contingent
consideration (a) — (1.9 ) 1.9 1.9 0.03
As
adjusted (b) $ 546.9 $ 414.3 $ 152.7 $
90.5 $ 1.70
Fiscal year ended January 2,
2016 Gross Operating Margin
SG&A Income Net Income Diluted EPS
As reported (GAAP) $ 1,258.0 $ 909.2 $ 392.9 $ 237.8 $ 4.50
Amortization of tradenames — (6.2 ) 6.2 3.9 0.08 Revaluation of
contingent consideration (a) — (1.9 ) 1.9 1.9
0.04
As adjusted (b) $ 1,258.0 $ 901.1 $ 401.0
$ 243.6 $ 4.61
(a) Revaluation of the contingent consideration liability
associated with the Company’s acquisition of Bonnie Togs in
2011.
(b) 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.
CARTER’S, INC.
RECONCILIATION OF NET INCOME ALLOCABLE
TO COMMON SHAREHOLDERS
(unaudited)
Fiscal quarter ended
April 2, April 4, 2016
2015 Weighted-average number of common and common equivalent
shares outstanding: Basic number of common shares outstanding
51,176,987 52,119,215 Dilutive effect of equity awards 467,103
495,386 Diluted number of common and common
equivalent shares outstanding 51,644,090 52,614,601
As reported on a
GAAP Basis:
Basic net income per common share: Net income $ 53,980 $ 49,792
Income allocated to participating securities (444 ) (560 ) Net
income available to common shareholders $ 53,536 $ 49,232
Basic net income per common share $ 1.05 $ 0.94 Diluted net
income per common share: Net income $ 53,980 $ 49,792 Income
allocated to participating securities (441 ) (556 ) Net income
available to common shareholders $ 53,539 $ 49,236
Diluted net income per common share $ 1.04 $ 0.94
As adjusted
(a):
Basic net income per common share: Net income $ 54,578 $ 51,713
Income allocated to participating securities (448 ) (582 ) Net
income available to common shareholders $ 54,130 $ 51,131
Basic net income per common share $ 1.06 $ 0.98 Diluted net
income per common share: Net income $ 54,578 $ 51,713 Income
allocated to participating securities (445 ) (577 ) Net income
available to common shareholders $ 54,133 $ 51,136
Diluted net income per common share $ 1.05 $ 0.97
(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
$0.6 million and $1.9 million in after-tax expenses from these
results for the fiscal quarters ended April 2, 2016 and
April 4, 2015, respectively.
RECONCILIATION OF U.S. GAAP AND
NON-GAAP INFORMATION
(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:
Four
fiscal Fiscal quarter ended quarters ended
April 2, 2016 April 4, 2015
April 2, 2016 (dollars in millions) Net income $ 54.0 $ 49.8
$ 242.0 Interest expense 6.7 6.7 27.0 Interest income (0.2 ) (0.1 )
(0.6 ) Income tax expense 29.3 26.2 133.5 Depreciation and
amortization (a) 18.2 17.2 69.4 EBITDA $ 108.0
$ 99.7 $ 471.3
Adjustments to
EBITDA Revaluation of contingent consideration (b) $ — $
0.5 $ 1.4
Adjusted EBITDA $ 108.0 $
100.2 $ 472.7
(a) Includes amortization of acquired tradenames.
(b) Revaluation of the contingent consideration liability
associated with the Company’s acquisition of Bonnie Togs in
2011.
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 item described in footnote (b) 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160428005790/en/
Carter’s, Inc.Sean McHugh, 678-791-7615Vice President &
Treasurer
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