COMPANY ALSO INTENDS TO REINSTATE ITS CASH DIVIDEND
The Company also announced it intends to reinstate the dividend on its common stock.
Revenue Outlook
As a result of the transaction, the Company now projects that revenue for the full year 2021 will increase 22% to 24% (increase 19% to 21% on a constant currency basis) as compared to 2020. The Company’s prior guidance, which included the full year revenue attributable to the assets being sold, was a projected increase in full year 2021 revenue of 24% to 26% (increase of 21% to 23% on a constant currency basis) as compared to 2020.
The Company reiterates its guidance for the second quarter of 2021 of an increase of 34% to 36% (increase of 29% to 31% on a constant currency basis) compared to the prior year period.
Earnings Outlook
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GAAP Basis: The Company now is projecting earnings per share on a GAAP basis for the full year 2021 of approximately
$6.60 . The projected full year 2021 earnings per share on a GAAP basis includes an estimated pre-tax net gain of approximately$100 million as a result of the transaction, as well as the estimated tax effect of the net gain and the other amounts for the period described below under the heading “Non-GAAP Exclusions.” Earnings per share on a non-GAAP basis, as discussed below, excludes these amounts. The Company’s prior guidance for the full year 2021 earnings per share on a GAAP basis was approximately$5.50 .
The Company’s projected earnings per share on a GAAP basis of$0.79 to$0.82 for the second quarter of 2021 is unchanged.
The Company’s projected effective tax rate on a GAAP basis of 17.5% to 19% for the full year 2021 and 44% to 46% for the second quarter of 2021 is unchanged.
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Non-GAAP Basis: While the Company expects the transaction to be slightly dilutive to its 2021 earnings per share on a non-GAAP basis, the Company reiterates its earnings per share on a non-GAAP basis guidance of approximately
$6.50 for the full year 2021 and$1.15 to$1.18 for the second quarter of 2021.
The Company’s projected effective tax rate on a non-GAAP basis of 17.5% to 19% for the full year 2021 and 36% to 38% for the second quarter of 2021 is unchanged.
Non-GAAP Exclusions:
The discussions in this release that refer to non-GAAP amounts exclude the following:
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Pre-tax costs of
$70 million incurred and expected to be incurred in 2021 in connection with actions to streamline the Company’s organization through reductions in its workforce, primarily in certain international markets, and to reduce its real estate footprint, including reductions in office space and select store closures, consisting of noncash asset impairments, severance, and contract termination and other costs, of which$43 million was incurred in the first quarter and approximately$15 million is expected to be incurred in the second quarter. -
Pre-tax costs of
$21 million incurred and expected to be incurred in 2021 in connection with the exit from the Heritage Brands Retail business announced inJuly 2020 and expected to be completed by mid-2021, consisting of severance and other termination benefits, accelerated amortization of lease assets and contract termination and other costs, of which$8 million was incurred in the first quarter and approximately$13 million is expected to be incurred in the second quarter. -
A pre-tax net gain of approximately
$100 million expected to be recorded in 2021 as a result of the sale of certain intellectual property and other assets of its Heritage Brands business to ABG as described above. - The estimated tax effects associated with the above pre-tax items, which are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each item that it had identified above as a non-GAAP exclusion to determine if such item is taxable or tax deductible, and if so, in what jurisdiction the tax expense or tax deduction would occur. All items above were identified as either primarily taxable or tax deductible, with the tax effect taken at the applicable income tax rate in the local jurisdiction, or as non-taxable or non-deductible, in which case the Company assumed no tax effect.
As a supplement to the Company’s GAAP results, the Company presents constant currency revenue information, which is a non-GAAP financial measure. The Company presents results in this manner because it is a global company that transacts business in multiple currencies but reports financial information in
The Company calculates constant currency revenue information by translating its foreign revenues for the relevant period into
Constant currency performance should be viewed in addition to, and not in lieu of or as superior to, the Company’s operating performance calculated in accordance with GAAP. The constant currency revenue information presented may not be comparable to similarly described measures reported by other companies.
Please see section entitled “Full Year Reconciliations of GAAP to Non-GAAP Amounts” later in this release for reconciliations of GAAP to non-GAAP amounts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release, including, without limitation, statements relating to the Company’s future revenue, earnings, plans, strategies, objectives, expectations and intentions are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which might not be anticipated, including, without limitation, (i) the Company’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the regulatory approval required for the Company’s proposed sale of certain intellectual property and other assets of its Heritage Brands business is not obtained or is obtained subject to conditions that are not anticipated; (iii) that other conditions to the closing of the transaction are not satisfied and the transaction is not completed; (iv) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (v) uncertainties as to the timing of the transaction; (vi) unexpected costs, charges or expenses resulting from the transaction; (vii) the Company’s ability to realize anticipated benefits and savings from restructuring and similar plans, such as the workforce reductions in
This press release includes certain non-GAAP financial measures, as defined under
Revenue and earnings per share guidance in this release speaks as of
Full Year Reconciliations of GAAP to Non-GAAP Amounts
The Company is presenting its 2021 estimated results on a non-GAAP basis by excluding (i) the costs incurred and expected to be incurred in connection with the exit from the Heritage Brands Retail business; (ii) the costs incurred and expected to be incurred in connection with actions announced in
The 2021 estimated results are presented on both a GAAP and non-GAAP basis. The Company believes presenting these results on a non-GAAP basis provides useful additional information to investors. The Company excludes such amounts that it deems to be non-recurring or non-operational and believes that excluding them (i) facilitates comparing current results against past and future results by eliminating amounts that it believes are not comparable between periods, thereby permitting management to evaluate performance and investors to make decisions based on the ongoing operations of the Company, and (ii) assists investors in evaluating the effectiveness of the Company’s operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. The Company uses its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, the Company’s Board of Directors and others. The Company’s results excluding the items described above are also the basis for certain incentive compensation calculations. The non-GAAP measures should be viewed in addition to, and not in lieu of or superior to, the Company’s operating performance measures calculated in accordance with GAAP. The information presented on a non-GAAP basis may not be comparable to similarly titled measures reported by other companies.
The estimated tax effects associated with the above pre-tax items are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each pre-tax item identified above as a non-GAAP exclusion to determine if such item is taxable or tax deductible, and, if so, in what jurisdiction the tax expense or tax deduction would occur. All of the pre-tax items identified as non-GAAP exclusions were identified as either primarily taxable or tax deductible, with the tax effect taken at the applicable income tax rate in the local jurisdiction, or as non-taxable or non-deductible, in which case the Company assumed no tax effect.
2021 Net Income Per Common Share Reconciliations
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Current Guidance |
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Previous Guidance
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Full Year
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Full Year
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GAAP net income per common share attributable to |
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Approximately |
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Approximately |
Estimated per common share impact of items identified as non-GAAP exclusions |
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Net income per common share attributable to |
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Approximately |
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Approximately |
Full Year Reconciliations of GAAP to Non-GAAP Amounts (continued)
The GAAP net income per common share attributable to
2021 Constant Currency Revenue Reconciliations |
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Current Guidance |
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Previous Guidance
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Full Year
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Full Year
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GAAP revenue increase |
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22% to 24% |
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24% to 26% |
Positive impact of foreign exchange |
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3% |
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3% |
Non-GAAP revenue increase on a constant currency basis |
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19% to 21% |
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21% to 23% |
As a supplement to the Company’s GAAP results, the Company presents constant currency revenue information, which is a non-GAAP financial measure. The Company presents results in this manner because it is a global company that transacts business in multiple currencies but reports financial information in
The Company calculates constant currency revenue information by translating its foreign revenues for the relevant period into
Constant currency performance should be viewed in addition to, and not in lieu of or as superior to, the Company’s operating performance calculated in accordance with GAAP. The constant currency revenue information presented may not be comparable to similarly described measures reported by other companies.
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