ROCKFORD — Wolverine Worldwide today reported record revenue for both the fourth quarter and fiscal year ended December 31, 2011, as well as record earnings per share for the full year.
“Our portfolio of strong, global lifestyle brands combined to deliver another year of record performance,” said the Company’s Chairman and CEO Blake W. Krueger. “Each of our three branded operating groups and our direct-to-consumer business contributed to the year’s outstanding results. Additionally, all major international regions reported double-digit revenue growth, as our newly created International Group focused on the significant opportunities outside of North America. Our distributor and licensee business, which markets our brands in nearly 190 countries, also had an exceptional year, with revenue up nearly 40 percent. We are very proud of the record performance in 2011 and are excited about the global momentum of our brands, our continued geographic expansion and the impressive product innovations we have planned for 2012.”
Highlights for the year:
Revenue rose 12.9 percent to a record $1,409.1 million, driven by double-digit growth from each of the Company’s branded operating groups: the Outdoor Group, Lifestyle Group and Heritage Group. Foreign exchange contributed $17.3 million, or 1.4 percent, to reported revenue growth. This year’s revenue represents the second consecutive year of double-digit growth, reflecting strong momentum for the Company’s brand portfolio in almost all major geographies.
The gross margin of 39.5 percent was equal to the prior year’s reported gross margin, representing outstanding performance in a challenging sourcing and product cost environment. The operating margin expanded to a record 12.1 percent, compared to the prior year reported operating margin of 11.4 percent. Diluted earnings per share increased 14.3 percent, to $2.48, compared to prior year adjusted earnings per share of $2.17. Reported full-year earnings per share in 2010 were $2.11. The excellent free cash flow generated in 2011 was used to invest for future growth, fund benefit plans for employees and return value to shareholders through the payout of $22.7 million in dividends and the repurchase of 1.8 million shares for $65.3 million.
Highlights for the fourth quarter 2011:
On top of the prior year’s 23.2 percent fourth quarter revenue growth, revenue in this year’s fourth quarter rose 5.6 percent to $406.5 million, representing the sixth consecutive quarter of record revenue, driven by growth from all branded operating groups.
The gross margin in the quarter decreased 20 basis points to 36.9 percent, with incremental non-cash LIFO expense lowering gross margin by 80 basis points.
The Company continued to invest behind its most important growth initiatives, with a double-digit increase in marketing investments in the quarter. Diluted earnings per share during the quarter of $0.47 compares to $0.52 in the prior year, a decrease of 9.6 percent. Organic growth across the portfolio of brands was offset by $0.06 per diluted share in incremental investments to drive accelerated growth; $0.04 per diluted share in incremental non-cash LIFO expense; $0.02 per diluted share in higher tax expense as a result of a lower effective tax rate in the prior year; and a one-time gain on the sale of a non-core business that added $0.02 per diluted share to fourth quarter fiscal 2010 results.
The Company’s Senior Vice President and CFO, Don Grimes, commented, “We are extremely pleased with the Company’s double-digit increases in both revenue and earnings per share, another record year by both measurements. This exceptional financial performance in 2011 is indicative of the strength of our business model, the drive and focus of our seasoned management team and the discipline with which we manage the business. We remain focused on our goal of delivering superior financial results while increasing brand investments to drive future growth.”
The Company’s outlook for 2012 reflects the following:
• The recent strengthening of the U.S. dollar vs. the British pound, the Canadian dollar and the Euro;
• Revenue in the range of $1.485 billion to $1.525 billion, representing growth of 5.4 percent to 8.2 percent versus the prior year;
• Moderate gross margin expansion;
• Modest SG&A deleverage reflecting approximately $11.1 million, or $0.15 per diluted share, of incremental non-cash pension expense; an estimated $2.5 million, or $0.03 per diluted share, of incremental expenses associated with a significant expansion of the Company’s distribution infrastructure in support of future growth; and incremental investments associated with retail store openings;
• A full-year effective tax rate of approximately 28 percent;
• Fully diluted weighted average shares outstanding of approximately 49 million; and
• Fully diluted earnings per share in the range of $2.60 to $2.70, representing growth of approximately 4.8 percent to 8.9 percent versus the prior year. Adjusted for the estimated incremental non-cash pension expense, earnings per share are expected to grow in the range of 10.9 percent to 14.9 percent.
