CHICAGO, March 05, 2020 (GLOBE NEWSWIRE) -- Methode Electronics, Inc. (NYSE: MEI), a global developer of custom-engineered and application-specific products and solutions, announced financial results for the third quarter of Fiscal 2020 ended February 1, 2020.
For the third quarter ended February 1, 2020, the Company's accounting period included 14 weeks compared to 13 weeks for the third quarter ended January 26, 2019. For the nine months ended February 1, 2020, the Company's accounting period included 40 weeks compared to 39 weeks for the nine months ended January 26, 2019. The following discussions of comparative results among periods should be reviewed in this context.
Financial Results for the Third Quarter of Fiscal 2020Net sales in the third quarter of Fiscal 2020 increased $39.0 million, or 15.8 percent, to $285.9 million from $246.9 million in the same quarter of Fiscal 2019. The increase in net sales was largely due to higher sales in the Automotive segment.
GAAP net income increased $10.5 million to $41.2 million, or $1.09 per share, in the third quarter of Fiscal 2020 from $30.7 million, or $0.82 per share, in the same period of Fiscal 2019. GAAP net income in the third quarter of Fiscal 2020 was higher mainly due to increased gross profit in the Automotive segment.
Adjusted net income, a non-GAAP financial measure, was $39.4 million, or $1.05 per share, in the third quarter of Fiscal 2020 compared to $31.3 million, or $0.83 per share, in the same period of Fiscal 2019. Adjusted net income excludes expenses for initiatives to reduce overall costs and improve operational profitability and purchase accounting adjustments in the applicable periods.
Year over year, Fiscal 2020 third quarter GAAP net income benefitted from:
Year over year, Fiscal 2020 third quarter GAAP net income was negatively affected by:
Consolidated gross profit margins increased to 27.7 percent in the third quarter of Fiscal 2020 compared to 26.0 percent in the same period last year. The improvement was due to the benefits realized from the initiatives to reduce overall costs and improve operational profitability taken in Fiscal 2019 and purchase accounting adjustments recorded in the third quarter of Fiscal 2019.
Adjusted gross profit margins, a non-GAAP financial measure, were 27.8 percent in the third quarter of Fiscal 2020 compared to 27.7 percent in the same period last year and exclude expenses for initiatives to reduce overall costs and improve operational profitability and purchase accounting adjustments in the applicable periods.
Selling and administrative expenses as a percentage of sales decreased to 11.5 percent in the third quarter of Fiscal 2020 compared to 13.3 percent in the same period last year. The decrease is attributable to lower employment levels as a result of the initiatives to reduce overall costs and improve operational profitability taken in Fiscal 2019, partially offset by higher performance-based compensation.
Adjusted selling and administrative expenses as a percentage of sales, a non-GAAP financial measure, were 11.3 percent in the third quarter of Fiscal 2020 compared to 12.5 percent in the same period last year and exclude expenses for initiatives to reduce overall costs and improve operational profitability and acquisition-related costs in the applicable periods.
Year over year, intangible asset amortization expense in the third quarter of Fiscal 2020 decreased $0.7 million, or 12.7 percent, to $4.8 million, due to lower amortization expense in the Interface segment.
In the Fiscal 2020 third quarter, income tax expense increased $5.8 million to $2.8 million compared to an income tax benefit of $3.0 million in the Fiscal 2019 third quarter. The Company’s effective tax rate was 6.4 percent in the Fiscal 2020 period compared to a benefit of (10.4) percent in the previous third quarter. The increase primarily related to higher pre-tax income in the Fiscal 2020 third quarter, partially offset by favorable adjustments due to U.S. Tax Reform from IRS regulations issued in December 2019, resulting in a lower quarterly effective tax rate. The prior year comparable period included a tax benefit related to the finalization of the transition tax from U.S. Tax Reform.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization of Intangibles), a non-GAAP financial measure, was $58.7 million in the third quarter of Fiscal 2020 compared to $43.1 million in the Fiscal 2019 period.
Adjusted EBITDA, a non-GAAP financial measure, which excludes expenses for initiatives to reduce overall costs and improve operational profitability and acquisition-related costs (including purchase accounting adjustments) from EBITDA, was $59.8 million in the third quarter of Fiscal 2020 compared to $49.5 million in the Fiscal 2019 period.
Segment Comparisons (GAAP Reported)Comparing the Automotive segment's Fiscal 2020 third quarter to the same period of Fiscal 2019,
Comparing the Industrial segment's Fiscal 2020 third quarter to the same period of Fiscal 2019,
Comparing the Interface segment's Fiscal 2020 third quarter to the same period of Fiscal 2019,
Comparing the Medical segment's Fiscal 2020 third quarter to the same period of Fiscal 2019,
Financial Results for the Nine Months Ended February 1, 2020For the nine months ended February 1, 2020, net sales increased $79.0 million, or 10.8 percent, to $813.3 million from $734.3 million in the same period of Fiscal 2019. The acquisition of Grakon increased net sales by $91.9 million. This was partially offset by the adverse impact from the UAW labor strike at GM, which reduced net sales by $28.7 million, and currency rate fluctuations, which reduced net sales by $10.4 million. Excluding the impact on sales from Grakon, the UAW labor strike at GM and currency rate fluctuations, net sales increased by $26.2 million.
GAAP net income increased $24.3 million to $93.3 million, or $2.47 per share, in the nine months ended February 1, 2020 from $69.0 million, or $1.83 per share, in the same period of Fiscal 2019. GAAP net income in the nine months ended February 1, 2020 benefited from a full period of Grakon results, but was also negatively impacted (including lost product gross margin and operational inefficiencies experienced due to reduced business levels) by the UAW labor strike at GM, which reduced net income by $7.4 million, or $0.20 per share.
Adjusted net income, a non-GAAP financial measure, was $91.9 million, or $2.44 per share, in the nine months ended February 1, 2020 compared to $87.9 million, or $2.34 per share, in the same period of Fiscal 2019. Adjusted net income excludes expenses for initiatives to reduce overall costs and improve operational profitability, acquisition-related costs (including purchase accounting adjustments) and long-term incentive plan accrual adjustments in the applicable periods.
Year over year, GAAP net income in the nine months ended February 1, 2020 benefitted from:
Year over year, GAAP net income in the nine months ended February 1, 2020 was negatively affected by:
Consolidated gross profit margins increased to 27.5 percent in the nine months ended February 1, 2020 compared to 26.6 percent in the same period last year. The improvement was primarily due to higher Grakon sales and purchase accounting adjustments related to Grakon recognized in the prior year period, partially offset by the adverse impact of the UAW labor strike at GM, the impact of foreign currency translation and product mix.
Adjusted gross profit margins, a non-GAAP financial measure, were 27.6 percent in the nine months ended February 1, 2020 compared to 27.8 percent in the same period of Fiscal 2019 and exclude expenses for initiatives to reduce overall costs and improve operational profitability and purchase accounting adjustments in the applicable periods.
Selling and administrative expenses as a percentage of sales decreased to 12.1 percent in the nine months ended February 1, 2020 compared to 15.0 percent in the same period of Fiscal 2019. The decrease is attributable to the benefit of initiatives to reduce overall costs and improve operational profitability taken in Fiscal 2019, lower stock-based compensation expense, lower acquisition-related costs and the impact of foreign currency translation, partially offset by increased performance-based compensation.
Adjusted selling and administrative expenses as a percentage of sales, a non-GAAP financial measure, were 12.0 percent in the nine months ended February 1, 2020 compared to 12.3 percent in the same period of Fiscal 2019 and exclude expenses for initiatives to reduce overall costs and improve operational profitability, acquisition-related costs and long-term incentive plan accrual adjustments in the applicable periods.
Year over year, intangible asset amortization expense in the nine months ended February 1, 2020 increased $3.2 million, or 28.8 percent, to $14.3 million, due to amortization expense related to the Grakon acquisition, partially offset by lower amortization expense in the Interface segment.
In the nine months ended February 1, 2020, income tax expense increased $10.8 million to $15.3 million compared to $4.5 million in the same period of Fiscal 2019. The Company’s effective tax rate increased to 14.1 percent in nine months ended February 1, 2020 from 6.1 percent in the same period of Fiscal 2019. The increase was primarily related to higher pre-tax income from the Grakon acquisition, partially offset by favorable adjustments due to U.S. Tax Reform from IRS regulations issued in December 2019. In addition, the Fiscal 2019 period included a tax benefit related to the finalization of the transition tax from U.S. Tax Reform.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization of Intangibles), a non-GAAP financial measure, was $152.6 million in the nine months ended February 1, 2020 compared to $109.1 million in the Fiscal 2019 period. Current period EBITDA was adversely impacted by $7.4 million from the UAW labor strike at GM.
Adjusted EBITDA, a non-GAAP financial measure, which excludes expenses for initiatives to reduce overall costs and improve operational profitability, acquisition-related costs (including purchase accounting adjustments) and long-term incentive plan accrual adjustments from EBITDA, was $154.2 million in the nine months ended February 1, 2020 compared to $137.6 million in the Fiscal 2019 period. Adjusted EBITDA in the current period was adversely impacted by $7.4 million from the UAW labor strike at GM.
Segment Comparisons (GAAP Reported)Comparing the Automotive segment's nine months ended February 1, 2020 to the same period of Fiscal 2019,
Comparing the Industrial segment's nine months ended February 1, 2020 to the same period of Fiscal 2019,
Comparing the Interface segment's nine months ended February 1, 2020 to the same period of Fiscal 2019,
Comparing the Medical segment's nine months ended February 1, 2020 to the same period of Fiscal 2019,
Fiscal 2020 GuidanceFor Fiscal 2020, Methode reaffirms sales guidance in the range of $1.10 billion to $1.13 billion and pre-tax income in the range of $150.3 million to $164.3 million and earnings per share in the range of $3.25 to $3.55.
Fiscal 2020 guidance considers:
The guidance ranges for Fiscal 2020 are based upon management's expectations regarding a variety of factors and involve a number of risks and uncertainties, including, but not limited to, the following:
Management CommentsPresident and Chief Executive Officer, Donald W. Duda said, “given the global macro-environment and significant headwinds faced by Methode throughout this fiscal year, I am pleased that our third quarter performance, largely based on organic growth fueled by new program launches and our sensor business, led to solid financial performance." Mr. Duda continued, "aided by the excellent cash generation, we continue to deleverage, reducing debt by over $100 million since the Grakon acquisition. That said, we remain cautious and mindful of the coronavirus situation."
Non-GAAP Financial MeasuresTo supplement the Company's financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Methode uses Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Income from Operations, Adjusted Gross Profit, Adjusted Gross Margins as a Percentage of Sales, Adjusted Selling and Administrative Expenses, Adjusted Selling and Administrative Expenses as a Percentage of Sales, EBITDA, Adjusted EBITDA, and Free Cash Flow as non-GAAP measures. Reconciliation to the nearest GAAP measures of all non-GAAP measures included in this press release can be found at the end of this release. Methode's definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company believes that these non-GAAP measures are useful because they (i) provide both management and investors meaningful supplemental information regarding financial performance by excluding certain expenses that may not be indicative of recurring core business operating results, (ii) permit investors to view Methode's performance using the same tools that management uses to evaluate its past performance, reportable business segments and prospects for future performance and (iii) otherwise provide supplemental information that may be useful to investors in evaluating Methode.
Conference CallThe Company will conduct a conference call and Webcast to review financial and operational highlights led by its President and Chief Executive Officer, Donald W. Duda, and Chief Financial Officer, Ron Tsoumas, today at 10:00 a.m. Central time.
To participate in the conference call, please dial (844) 369-8770 (domestic) or (862) 298-0840 (international) at least five minutes prior to the start of the event. A simultaneous Webcast can be accessed through the Company’s Web site, www.methode.com, by selecting the Investor Relations page, and then clicking on the “Webcast” icon.
A replay of the conference call will be available shortly after the call through March 12, 2020, by dialing (877) 481-4010 and providing Conference ID number 33352. On the Internet, a replay will be available for 30 days through the Company’s Web site, www.methode.com, by selecting the Investor Relations page and then clicking on the “Webcast” icon.
About Methode Electronics, Inc.Methode Electronics, Inc. (NYSE: MEI) is a global developer of custom engineered and application specific products and solutions with manufacturing, design and testing facilities in Belgium, Canada, China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the Netherlands, Singapore, Switzerland, the United Kingdom and the United States. We design, manufacture and market devices employing electrical, radio remote control, electronic, LED lighting, wireless and sensing technologies. Our business is managed on a segment basis, with those segments being Automotive, Industrial, Interface and Medical. Our components are found in the primary end-markets of the aerospace, appliance, automotive, commercial vehicle, construction, consumer and industrial equipment, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), medical, rail and other transportation industries. Further information can be found on Methode's Web site www.methode.com.
Forward-Looking StatementsThis press release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this press release involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitation, the following: (1) dependence on a small number of large customers, including two large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and communications industries; (3) international trade disputes resulting in tariffs and our ability to mitigate tariffs; (4) potential impact from the coronavirus outbreak; (5) timing, quality and cost of new program launches; (6) ability to withstand price pressure, including pricing reductions; (7) ability to successfully market and sell Dabir Surfaces products; (8) currency fluctuations; (9) customary risks related to conducting global operations; (10) ability to withstand business interruptions; (11) recognition of goodwill impairment charges; (12) ability to successfully benefit from acquisitions and divestitures; (13) investment in programs prior to the recognition of revenue; (14) dependence on the availability and price of materials; (15) fluctuations in our gross margins; (16) dependence on our supply chain; (17) income tax rate fluctuations; (18) ability to keep pace with rapid technological changes; (19) breach of our information technology systems; (20) ability to avoid design or manufacturing defects; (21) ability to compete effectively; (22) ability to protect our intellectual property; (23) success of Grakon and/or our ability to implement and profit from new applications of the acquired technology; (24) significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan; (25) ability to manage our debt levels and any restrictions thereunder; and (26) costs and expenses due to regulations regarding conflict minerals.
For Methode Electronics, Inc.Mark ShermetaroVice President Corporate Developmentmshermetaro@methode.com248-752-3468
Nathan AblerDresner Corporate Servicesnabler@dresnerco.com714-742-4180
METHODE ELECTRONICS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)(in millions, except share and per-share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
February 1,2020 | January 26,2019 | February 1,2020 | January 26,2019 | |||||||||||||
(14 Weeks) | (13 Weeks) | (40 Weeks) | (39 Weeks) | |||||||||||||
Net Sales | $ | 285.9 | $ | 246.9 | $ | 813.3 | $ | 734.3 | ||||||||
Cost of Products Sold | 206.6 | 182.6 | 589.6 | 539.1 | ||||||||||||
Gross Profit | 79.3 | 64.3 | 223.7 | 195.2 | ||||||||||||
Selling and Administrative Expenses | 33.0 | 32.8 | 98.6 | 110.3 | ||||||||||||
Amortization of Intangibles | 4.8 | 5.5 | 14.3 | 11.1 | ||||||||||||
Income from Operations | 41.5 | 26.0 | 110.8 | 73.8 | ||||||||||||
Interest Expense, Net | 2.4 | 3.2 | 8.0 | 5.0 | ||||||||||||
Other Income, Net | (4.9 | ) | (4.9 | ) | (5.8 | ) | (4.7 | ) | ||||||||
Income before Income Taxes | 44.0 | 27.7 | 108.6 | 73.5 | ||||||||||||
Income Tax Expense (Benefit) | 2.8 | (3.0 | ) | 15.3 | 4.5 | |||||||||||
Net Income | $ | 41.2 | $ | 30.7 | $ | 93.3 | $ | 69.0 | ||||||||
Basic and Diluted Income per Share: | ||||||||||||||||
Basic | $ | 1.10 | $ | 0.82 | $ | 2.48 | $ | 1.84 | ||||||||
Diluted | $ | 1.09 | $ | 0.82 | $ | 2.47 | $ | 1.83 | ||||||||
Cash Dividends per Share | $ | 0.11 | $ | 0.11 | $ | 0.33 | $ | 0.33 | ||||||||
Weighted Average Number of Shares Outstanding: | ||||||||||||||||
Basic | 37,587,742 | 37,405,550 | 37,570,423 | 37,387,181 | ||||||||||||
Diluted | 37,753,971 | 37,654,250 | 37,720,516 | 37,637,470 |
METHODE ELECTRONICS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in millions, except share and per-share data)
February 1,2020 | April 27,2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and Cash Equivalents | $ | 79.9 | $ | 83.2 | ||||
Accounts Receivable, Net | 227.9 | 219.3 | ||||||
Inventories | 126.1 | 116.7 | ||||||
Income Tax Receivable | 9.7 | 14.3 | ||||||
Prepaid Expenses and Other Current Assets | 20.3 | 20.0 | ||||||
TOTAL CURRENT ASSETS | 463.9 | 453.5 | ||||||
LONG-TERM ASSETS | ||||||||
Property, Plant and Equipment, Net | 199.0 | 191.9 | ||||||
Goodwill | 233.2 | 233.3 | ||||||
Other Intangible Assets, Net | 251.0 | 264.9 | ||||||
Operating Lease Assets, Net | 27.3 | — | ||||||
Deferred Tax Assets | 34.3 | 34.3 | ||||||
Pre-production Costs | 39.9 | 32.8 | ||||||
Other Long-term Assets | 33.7 | 21.0 | ||||||
TOTAL LONG-TERM ASSETS | 818.4 | 778.2 | ||||||
TOTAL ASSETS | $ | 1,282.3 | $ | 1,231.7 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable | $ | 88.8 | $ | 91.9 | ||||
Accrued Employee Liabilities | 19.7 | 20.1 | ||||||
Other Accrued Expenses | 22.6 | 33.9 | ||||||
Short-term Operating Lease Liability | 6.0 | — | ||||||
Short-term Debt | 15.1 | 15.7 | ||||||
Income Tax Payable | 11.4 | 19.3 | ||||||
TOTAL CURRENT LIABILITIES | 163.6 | 180.9 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long-term Debt | 241.9 | 276.9 | ||||||
Long-term Operating Lease Liability | 21.9 | — | ||||||
Long-term Income Tax Payable | 29.3 | 33.0 | ||||||
Other Long-term Liabilities | 16.9 | 14.8 | ||||||
Deferred Tax Liabilities | 35.8 | 36.4 | ||||||
TOTAL LONG-TERM LIABILITIES | 345.8 | 361.1 | ||||||
TOTAL LIABILITIES | 509.4 | 542.0 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Common Stock, $0.50 par value, 100,000,000 shares authorized, 38,438,111 shares and 38,333,576 shares issued as of February 1, 2020 and April 27, 2019, respectively | 19.2 | 19.2 | ||||||
Additional Paid-in Capital | 156.0 | 150.4 | ||||||
Accumulated Other Comprehensive Loss | (16.4 | ) | (13.6 | ) | ||||
Treasury Stock, 1,346,624 shares as of February 1, 2020 and April 27, 2019 | (11.5 | ) | (11.5 | ) | ||||
Retained Earnings | 625.6 | 545.2 | ||||||
TOTAL SHAREHOLDERS' EQUITY | 772.9 | 689.7 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,282.3 | $ | 1,231.7 |
METHODE ELECTRONICS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(in millions)
Nine Months Ended | ||||||||
February 1,2020 | January 26,2019 | |||||||
(40 Weeks) | (39 Weeks) | |||||||
OPERATING ACTIVITIES | ||||||||
Net Income | $ | 93.3 | $ | 69.0 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization | 36.0 | 30.6 | ||||||
Stock-based Compensation Expense | 5.6 | 11.7 | ||||||
Change in Cash Surrender Value of Life Insurance | (0.6 | ) | (0.2 | ) | ||||
Amortization of Debt Issuance Costs | 0.5 | 0.3 | ||||||
Gain on Sale of Business / Investment / Property | (0.4 | ) | (0.6 | ) | ||||
Other | 0.3 | (0.4 | ) | |||||
Changes in Operating Assets and Liabilities: | ||||||||
Accounts Receivable | (10.5 | ) | 12.2 | |||||
Inventories | (9.9 | ) | (10.9 | ) | ||||
Prepaid Expenses and Other Assets | (12.8 | ) | (16.5 | ) | ||||
Accounts Payable and Other Liabilities | (18.9 | ) | (30.9 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 82.6 | 64.3 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of Property, Plant and Equipment | (34.9 | ) | (37.0 | ) | ||||
Acquisitions of Businesses, Net of Cash Acquired | — | (421.6 | ) | |||||
Sale of Business/Investment/Property | 0.5 | 0.3 | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (34.4 | ) | (458.3 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Taxes Paid Related to Net Share Settlement of Equity Awards | (0.4 | ) | (1.7 | ) | ||||
Repayments of Finance Leases | (0.5 | ) | — | |||||
Cash Dividends | (12.2 | ) | (12.7 | ) | ||||
Proceeds from Borrowings | 57.3 | 350.0 | ||||||
Repayments of Borrowings | (93.9 | ) | (103.3 | ) | ||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (49.7 | ) | 232.3 | |||||
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents | (1.8 | ) | (10.7 | ) | ||||
DECREASE IN CASH AND CASH EQUIVALENTS | (3.3 | ) | (172.4 | ) | ||||
Cash and Cash Equivalents at Beginning of the Year | 83.2 | 246.1 | ||||||
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | $ | 79.9 | $ | 73.7 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash Paid During the Period For: | ||||||||
Interest | $ | 7.6 | $ | 5.6 | ||||
Income Taxes, Net of Refunds | $ | 16.2 | $ | 18.7 |
METHODE ELECTRONICS, INC. AND SUBSIDIARIES(Unaudited)(in millions, except per share data)
Reconciliation of Non-GAAP Financial Measures for the Three Months Ended February 1, 2020 (14 Weeks)
Acquisition-Related Costs | ||||||||||||||||||||||||||||
U.S. GAAP(As Reported) | Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability | Purchase Accounting Adjustments Related to Inventory | Severance | Other | Transition tax and the impact of revaluing deferred taxes due to the change in the federal tax rate from U.S. Tax Reform | Non-U.S. GAAP Financial Measures | ||||||||||||||||||||||
Gross Profit | $ | 79.3 | $ | 0.4 | $ | — | $ | — | $ | — | $ | — | $ | 79.7 | ||||||||||||||
Gross Margin (% of sales) | 27.7 | % | 0.1 | % | — | % | — | % | — | % | — | % | 27.8 | % | ||||||||||||||
Selling and Administrative Expenses | $ | 33.0 | $ | (0.7 | ) | $ | — | $ | — | $ | — | $ | — | $ | 32.3 | |||||||||||||
Selling and Administrative Expenses (% of sales) | 11.5 | % | (0.2 | )% | — | % | — | % | — | % | — | % | 11.3 | % | ||||||||||||||
Income from Operations | $ | 41.5 | $ | 1.1 | $ | — | $ | — | $ | — | $ | — | $ | 42.6 | ||||||||||||||
Net Income | $ | 41.2 | $ | 1.0 | $ | — | $ | — | $ | — | $ | (2.8 | ) | $ | 39.4 | |||||||||||||
Diluted Earnings per Share | $ | 1.09 | $ | 0.03 | $ | — | $ | — | $ | — | $ | (0.07 | ) | $ | 1.05 |
Reconciliation of Non-GAAP Financial Measures for the Three Months Ended January 26, 2019 (13 Weeks)
Acquisition-Related Costs | ||||||||||||||||||||||||||||
U.S. GAAP(As Reported) | Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability | Purchase Accounting Adjustments Related to Inventory | Severance | Other | Transition tax and the impact of revaluing deferred taxes due to the change in the federal tax rate from U.S. Tax Reform | Non-U.S. GAAP Financial Measures | ||||||||||||||||||||||
Gross Profit | $ | 64.3 | $ | 1.3 | $ | 3.0 | $ | — | $ | — | $ | — | $ | 68.6 | ||||||||||||||
Gross Margin (% of sales) | 26.0 | % | 0.5 | % | 1.2 | % | — | % | — | % | — | % | 27.7 | % | ||||||||||||||
Selling and Administrative Expenses | $ | 32.8 | $ | (1.3 | ) | $ | — | $ | (0.1 | ) | $ | (0.7 | ) | $ | — | $ | 30.7 | |||||||||||
Selling and Administrative Expenses (% of sales) | 13.3 | % | (0.5 | )% | — | % | — | % | (0.3 | )% | — | % | 12.5 | % | ||||||||||||||
Income from Operations | $ | 26.0 | $ | 2.6 | $ | 3.0 | $ | 0.1 | $ | 0.7 | $ | — | $ | 32.4 | ||||||||||||||
Net Income | $ | 30.7 | $ | 2.2 | $ | 2.5 | $ | 0.1 | $ | 0.6 | $ | (4.8 | ) | $ | 31.3 | |||||||||||||
Diluted Earnings per Share | $ | 0.82 | $ | 0.06 | $ | 0.07 | $ | — | $ | 0.01 | $ | (0.13 | ) | $ | 0.83 |
Reconciliation of Non-GAAP Financial Measures for the Nine Months Ended February 1, 2020 (40 Weeks)
Acquisition-Related Costs | ||||||||||||||||||||||||||||||||
U.S. GAAP(As Reported) | Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability | Purchase Accounting Adjustments Related to Inventory | Severance | Other | Long-term Incentive Plan Accrual Adjustment | Transition tax and the impact of revaluing deferred taxes due to the change in the federal tax rate from U.S. Tax Reform | Non-U.S. GAAP Financial Measures | |||||||||||||||||||||||||
Gross Profit | $ | 223.7 | $ | 0.6 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 224.3 | ||||||||||||||||
Gross Margin (% of sales) | 27.5 | % | 0.1 | % | — | % | — | % | — | % | — | % | — | % | 27.6 | % | ||||||||||||||||
Selling and Administrative Expenses | $ | 98.6 | $ | (1.0 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 97.6 | |||||||||||||||
Selling and Administrative Expenses (% of sales) | 12.1 | % | (0.1 | )% | — | % | — | % | — | % | — | % | — | % | 12.0 | % | ||||||||||||||||
Income from Operations | $ | 110.8 | $ | 1.6 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 112.4 | ||||||||||||||||
Net Income | $ | 93.3 | $ | 1.4 | $ | — | $ | — | $ | — | $ | — | $ | (2.8 | ) | $ | 91.9 | |||||||||||||||
Diluted Earnings per Share | $ | 2.47 | $ | 0.04 | $ | — | $ | — | $ | — | $ | — | $ | (0.07 | ) | $ | 2.44 |
Reconciliation of Non-GAAP Financial Measures for the Nine Months Ended January 26, 2019 (39 Weeks)
Acquisition-Related Costs | ||||||||||||||||||||||||||||||||
U.S. GAAP(As Reported) | Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability | Purchase Accounting Adjustments Related to Inventory | Severance | Other | Long-term Incentive Plan Accrual Adjustment | Transition tax and the impact of revaluing deferred taxes due to the change in the federal tax rate from U.S. Tax Reform | Non-U.S. GAAP Financial Measures | |||||||||||||||||||||||||
Gross Profit | $ | 195.2 | $ | 2.7 | $ | 5.6 | $ | — | $ | — | $ | — | $ | — | $ | 203.5 | ||||||||||||||||
Gross Margin (% of sales) | 26.6 | % | 0.4 | % | 0.8 | % | — | % | — | % | — | % | — | % | 27.8 | % | ||||||||||||||||
Selling and Administrative Expenses | $ | 110.3 | $ | (3.1 | ) | $ | — | $ | (1.5 | ) | $ | (8.2 | ) | $ | (7.4 | ) | $ | — | $ | 90.1 | ||||||||||||
Selling and Administrative Expenses (% of sales) | 15.0 | % | (0.4 | )% | — | % | (0.2 | )% | (1.1 | )% | (1.0 | )% | — | % | 12.3 | % | ||||||||||||||||
Income from Operations | $ | 73.8 | $ | 5.8 | $ | 5.6 | $ | 1.5 | $ | 8.2 | $ | 7.4 | $ | — | $ | 102.3 | ||||||||||||||||
Net Income | $ | 69.0 | $ | 4.8 | $ | 4.7 | $ | 1.2 | $ | 6.8 | $ | 6.2 | $ | (4.8 | ) | $ | 87.9 | |||||||||||||||
Diluted Earnings per Share | $ | 1.83 | $ | 0.13 | $ | 0.13 | $ | 0.03 | $ | 0.18 | $ | 0.17 | $ | (0.13 | ) | $ | 2.34 |
Reconciliation of EBITDA and Adjusted EBITDA to Net Income(in millions)
Three Months Ended | Nine Months Ended | |||||||||||||||
February 1,2020 | January 26,2019 | February 1,2020 | January 26,2019 | |||||||||||||
(14 Weeks) | (13 Weeks) | (40 Weeks) | (39 Weeks) | |||||||||||||
Net Income | $ | 41.2 | $ | 30.7 | $ | 93.3 | $ | 69.0 | ||||||||
Income Tax Expense (Benefit) | 2.8 | (3.0 | ) | 15.3 | 4.5 | |||||||||||
Interest Expense, Net | 2.4 | 3.2 | 8.0 | 5.0 | ||||||||||||
Amortization of Intangibles | 4.8 | 5.5 | 14.3 | 11.1 | ||||||||||||
Depreciation | 7.5 | 6.7 | 21.7 | 19.5 | ||||||||||||
EBITDA | 58.7 | 43.1 | 152.6 | 109.1 | ||||||||||||
Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability | 1.1 | 2.6 | 1.6 | 5.8 | ||||||||||||
Acquisition-related Costs - Purchase Accounting Adjustments Related to Inventory | — | 3.0 | — | 5.6 | ||||||||||||
Acquisition-related Costs - Severance | — | 0.1 | — | 1.5 | ||||||||||||
Acquisition-related Costs - Other | — | 0.7 | — | 8.2 | ||||||||||||
Long-term Incentive Plan Accrual Adjustment due to change in Fiscal 2020 EBITDA estimate | — | — | — | 7.4 | ||||||||||||
Adjusted EBITDA | $ | 59.8 | $ | 49.5 | $ | 154.2 | $ | 137.6 |
Reconciliation of Free Cash Flow to Net Income(in millions)
Three Months Ended | Nine Months Ended | |||||||||||||||
February 1,2020 | January 26,2019 | February 1,2020 | January 26,2019 | |||||||||||||
(14 Weeks) | (13 Weeks) | (40 Weeks) | (39 Weeks) | |||||||||||||
Net Income | $ | 41.2 | $ | 30.7 | $ | 93.3 | $ | 69.0 | ||||||||
Amortization of Intangibles | 4.8 | 5.5 | 14.3 | 11.1 | ||||||||||||
Depreciation | 7.5 | 6.7 | 21.7 | 19.5 | ||||||||||||
Purchases of Property, Plant and Equipment | (8.1 | ) | (8.4 | ) | (34.9 | ) | (37.0 | ) | ||||||||
Free Cash Flow | $ | 45.4 | $ | 34.5 | $ | 94.4 | $ | 62.6 |