COLM Columbia Sportswear Company

First Quarter 2024 Highlights

• Net sales decreased 6 percent to $770.0 million, compared to first quarter 2023.
• Operating income decreased 21 percent to $44.7 million, or 5.8 percent of net sales, compared to first quarter 2023 operating income of $56.4 million, or 6.9 percent of net sales.
• Diluted earnings per share decreased 4 percent to $0.71, compared to first quarter 2023 diluted earnings per share of $0.74.
• Exited the quarter with $787.7 million of cash, cash equivalents and short-term investments, and no borrowings.
• Exited the quarter with $607.4 million of inventories, a decrease of 37 percent compared to March 31, 2023.
• The Company repurchased $50.2 million of common stock during the quarter.

Full Year 2024 Financial Outlook

The following forward-looking statements reflect our expectations as of April 25, 2024 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” below. Additional disclosures and financial outlook details can be found in the Full Year 2024 Financial Outlook section below and the CFO Commentary and Financial Review presentation.

• Net sales of $3.35 to $3.42 billion (unchanged), representing a net sales decline of 4.0 to 2.0 percent (unchanged) compared to 2023.
• Operating income of $259 to $291 million (prior $256 to $288 million), representing operating margin of 7.7 to 8.5 percent (prior 7.6 to 8.4 percent).
• Diluted earnings per share of $3.65 to $4.05 (prior $3.45 to $3.85).

 

Columbia Sportswear Company (NASDAQ: COLM, the "Company"), a multi-brand global leading innovator in outdoor, active and lifestyle products including apparel, footwear, accessories, and equipment, today announced first quarter 2024 financial results for the period ended March 31, 2024.

Chairman, President and Chief Executive Officer Tim Boyle commented, “2024 has started out broadly in line with our expectations. We are making good progress against our top priorities. Inventory exiting the quarter was down 37 percent year-over-year, and our Profit Improvement Plan is on track to achieve our savings targets. Based on year-to-date results, we are reiterating our net sales outlook while modestly increasing our diluted EPS range.

“Our brand growth acceleration strategies across the portfolio are underway. As warmer weather takes hold, consumers are being introduced to our newest cooling products and technologies, including Columbia Omni-Shade Broad Spectrum Air Flow, and our newest footwear system, Omni-MAX.

“Our financial position remains strong, with approximately $788 million in cash and short-term investments, and no borrowings at quarter end. I’m confident in our team, our strategies, and our ability to achieve the significant long-term growth opportunities we see across the business. We are committed to investing in our strategic priorities to:

• accelerate profitable growth;
• create iconic products that are differentiated, functional and innovative;
• drive brand engagement through increased, focused demand creation investments;
• enhance consumer experiences by investing in capabilities to delight and retain consumers;
• amplify marketplace excellence, with digitally-led, omni-channel, global distribution; and
• empower talent that is driven by our core values, through a diverse and inclusive workforce."

CFO's Commentary and Financial Review Presentation Available Online

For a detailed review of the Company's first quarter 2024 financial results, please refer to the CFO Commentary and Financial Review presentation furnished to the Securities and Exchange Commission (the "SEC") on a Current Report on Form 8-K and published on the Investor Relations section of the Company's website at http://investor.columbia.com/financial-results at approximately 4:15 p.m. ET today. Analysts and investors are encouraged to review this commentary prior to participating in our conference call.

First Quarter 2024 Financial Results

(All comparisons are between the first quarter 2024 and the first quarter 2023, unless otherwise noted.)

Net sales decreased 6 percent (6 percent constant-currency) to $770.0 million from $820.6 million for the comparable period in 2023. The decline in net sales primarily reflects lower wholesale net sales in the United States and Canada, driven by retailer cautiousness, a difficult competitive environment, and generally soft consumer demand.

Gross margin increased 190 basis points to 50.6 percent of sales compared to 48.7 percent of net sales for the comparable period in 2023. Gross margin expansion primarily reflects lower inbound freight costs and favorable region and channel net sales mix, which more than offset the gross margin impact of inventory reduction efforts in our direct-to-consumer ("DTC") brick and mortar business.

SG&A expenses were relatively flat at $349.3 million, or 45.4 percent of net sales, compared to $347.4 million, or 42.3 percent of net sales, for the comparable period in 2023. The largest changes in SG&A expenses primarily reflect higher DTC expenses, partially offset by lower supply chain costs and decreased variable demand creation expenses.

Operating income decreased 21 percent to $44.7 million, or 5.8 percent of net sales, compared to operating income of $56.4 million, or 6.9 percent of net sales, for the comparable period in 2023.

Interest income, net was $9.2 million, compared to $3.3 million for the comparable period in 2023, reflecting higher yields on increased levels of cash, cash equivalents, and short-term investments.

Income tax expense of $11.8 million resulted in an effective income tax rate of 21.9 percent, compared to income tax expense of $14.4 million, or an effective income tax rate of 23.7 percent, for the comparable period in 2023.

Net income decreased 8 percent to $42.3 million, or $0.71 per diluted share, compared to net income of $46.2 million, or $0.74 per diluted share, for the comparable period in 2023.

Balance Sheet as of March 31, 2024

Cash, cash equivalents, and short-term investments totaled $787.7 million, compared to $460.6 million as of March 31, 2023.

The Company had no borrowings as of either March 31, 2024 or March 31, 2023.

Inventories decreased 37 percent to $607.4 million, compared to $959.2 million as of March 31, 2023.

Cash Flow for the Three Months Ended March 31, 2024

Net cash provided by operating activities was $106.8 million, compared to $78.0 million for the same period in 2023.

Capital expenditures totaled $14.8 million, compared to $14.0 million for the same period in 2023.

Share Repurchases for the Three Months Ended March 31, 2024

The Company repurchased 631,468 shares of common stock for an aggregate of $50.2 million, or an average price per share of $79.45.

At March 31, 2024, $295.2 million remained available under our stock repurchase authorization, which does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time.

Quarterly Cash Dividend

The Board of Directors approved a regular quarterly cash dividend of $0.30 per share, payable on May 30, 2024 to shareholders of record on May 16, 2024.

Full Year 2024 Financial Outlook

(Additional financial outlook details can be found in the CFO Commentary and Financial Review presentation.)

The Company's full year 2024 and second quarter 2024 Financial Outlook are each forward-looking in nature, and the following forward-looking statements reflect our expectations as of April 25, 2024 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” below. These risks and uncertainties limit our ability to accurately forecast results.

Net sales are expected to decrease 4.0 to 2.0 percent (unchanged), resulting in net sales of $3.35 to $3.42 billion (unchanged), compared to $3.49 billion in 2023.

Gross margin is expected to expand 80 to 120 basis points (prior 100 to 150 basis points) to 50.4 to 50.8 percent of net sales (prior 50.6 to 51.1 percent) from 49.6 percent of net sales in 2023.

SG&A expenses, as a percent of net sales, are expected to be 43.0 to 43.4 percent (prior 43.2 to 43.5 percent), compared to SG&A expense as a percent of net sales of 40.6 percent in 2023.

Operating income is expected to be $259 to $291 million (prior $256 to $288 million), resulting in operating margin of 7.7 to 8.5 percent (prior 7.6 to 8.4 percent), compared to operating margin of 8.9 percent in 2023.

Interest income, net is expected to be approximately $28 million (prior $19 million).

Effective income tax rate is expected to be 24.0 to 25.0 percent (unchanged).

Net income is expected to be $217 to $240 million (prior $207 to $231 million), resulting in diluted earnings per share of $3.65 to $4.05 (prior $3.45 to $3.85). This diluted earnings per share range is based on estimated weighted average diluted shares outstanding of 59.3 million (prior 60.1 million).

Foreign Currency

• Foreign currency translation is anticipated to decrease 2024 net sales growth by approximately 20 basis points (prior 60 basis points increase).
• Foreign currency is expected to have an approximately $0.04 negative impact on diluted earnings per share (prior $0.03 positive impact) due primarily to negative foreign currency transactional effects from hedging of inventory production.

Cash Flows

Operating cash flow is expected to be at least $350 million (prior at least $300 million).

Capital expenditures are planned to be in the range of $60 to $80 million (unchanged).

Second Quarter 2024 Financial Outlook

• Net sales are expected to be $557 to $576 million, representing a decline of 10 to 7 percent from $620.9 million for the comparable period in 2023.
• Operating loss is expected to be $42 to $27 million, resulting in operating margin of (7.6) to (4.7) percent, compared to operating margin of 1.0 percent in the comparable period in 2023.
• Diluted earnings (loss) per share is expected to be $(0.46) to $(0.26), compared to $0.14 for the comparable period in 2023.

Conference Call

The Company will hold its first quarter 2024 conference call at 5:00 p.m. ET today. Dial (888) 506-0062 to participate. The call will also be webcast live on the Investor Relations section of the Company's website at http://investor.columbia.com.

Second Quarter 2024 Reporting Date

The Company plans to report second quarter 2024 financial results on Thursday, July 25, 2024 at approximately 4:00 p.m. ET.

Supplemental Financial Information

Since Columbia Sportswear Company is a global company, the comparability of its operating results reported in United States dollars is affected by foreign currency exchange rate fluctuations because the underlying currencies in which it transacts change in value over time compared to the United States dollar. To supplement financial information reported in accordance with GAAP, the Company discloses constant-currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of changes in the exchange rates used to translate net sales generated in foreign currencies into United States dollars. The Company calculates constant-currency net sales by translating net sales in foreign currencies for the current period into United States dollars at the average exchange rates that were in effect during the comparable period of the prior year. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors may find the non-GAAP financial measure useful by reviewing our net sales results without the volatility in foreign currency exchange rates. This non-GAAP financial measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results.

The non-GAAP financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP. The Company provides a reconciliation of non-GAAP measures to the most directly comparable financial measure calculated in accordance with GAAP. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" table included herein. The non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s expectations, anticipations or beliefs about the Company's ability to realize growth opportunities and manage expenses, financial position, marketing strategies, inventory, full year 2024 net sales, gross margin, SG&A expenses, operating income, net interest income, effective income tax rate, net income, diluted earnings per share, weighted average diluted shares outstanding, foreign currency translation, cash flows, and capital expenditures, as well as second quarter 2024 net sales, operating income, and diluted earnings per share. Forward-looking statements often use words such as "will," "anticipate," "estimate," "expect," "should," "may," "plan" and other words and terms of similar meaning or reference future dates. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors," and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. Potential risks and uncertainties that may affect our future revenues, earnings and performance and could cause the actual results of operations or financial condition of the Company to differ materially from the anticipated results expressed or implied by forward-looking statements in this document include: loss of key customer accounts; our ability to execute and realize costs savings related to our Profit Improvement Plan; our ability to effectively execute our business strategies, including initiatives to upgrade our business processes and information technology (“IT”) systems and investments in our DTC businesses; our ability to maintain the strength and security of our IT systems; the effects of unseasonable weather, including global climate change; the seasonality of our business and timing of orders; trends affecting consumer spending, including changes in the level of consumer spending, and retail traffic patterns; unfavorable economic conditions generally, the financial health of our customers and retailer consolidation; higher than expected rates of order cancellations; changes affecting consumer demand and preferences and fashion trends; changes in international, federal or state tax, labor and other laws and regulations that affect our business, including changes in corporate tax rates, tariffs, international trade policy and geopolitical tensions, or increasing wage rates; our ability to attract and retain key personnel; risks inherent in doing business in foreign markets, including fluctuations in currency exchange rates, global credit market conditions, changes in global regulation and economic and political conditions and disease outbreaks; volatility in global production and transportation costs and capacity and timing; our ability to effectively manage our inventory and our wholesale customer’s to manage their inventories; our dependence on third-party manufacturers and suppliers and our ability to source at competitive prices from them or at all; the effectiveness of our sales and marketing efforts; business disruptions and acts of terrorism, cyber-attacks or military activities around the globe; intense competition in the industry; our ability to establish and protect our intellectual property; and our ability to develop innovative products. The Company cautions that forward-looking statements are inherently less reliable than historical information. The Company does not undertake any duty to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About Columbia Sportswear Company

Columbia Sportswear Company connects active people with their passions and is a global multi-brand leading innovator in outdoor, active and lifestyle products including apparel, footwear, accessories, and equipment. Founded in 1938 in Portland, Oregon, the Company's brands are sold in more than 100 countries. In addition to the Columbia® brand, Columbia Sportswear Company also owns the Mountain Hard Wear®, SOREL® and prAna® brands. To learn more, please visit the Company's websites at www.columbia.com, www.mountainhardwear.com, www.sorel.com, and www.prana.com.

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands)

 

March 31, 2024

 

March 31, 2023

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

418,462

 

$

361,049

Short-term investments

 

 

369,270

 

 

99,511

Accounts receivable, net

 

 

366,375

 

 

466,690

Inventories

 

 

607,373

 

 

959,234

Prepaid expenses and other current assets

 

 

84,738

 

 

100,880

Total current assets

 

 

1,846,218

 

 

1,987,364

Property, plant and equipment, net

 

 

277,947

 

 

282,921

Operating lease right-of-use assets

 

 

361,103

 

 

318,728

Intangible assets, net

 

 

79,496

 

 

81,146

Goodwill

 

 

26,694

 

 

51,694

Deferred income taxes

 

 

100,162

 

 

96,865

Other non-current assets

 

 

70,611

 

 

70,256

Total assets

 

$

2,762,231

 

$

2,888,974

LIABILITIES AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

150,131

 

 

220,231

Accrued liabilities

 

 

216,903

 

 

271,625

Operating lease liabilities

 

 

71,550

 

 

69,452

Income taxes payable

 

 

8,722

 

 

7,377

Total current liabilities

 

 

447,306

 

 

568,685

Non-current operating lease liabilities

 

 

340,310

 

 

303,571

Income taxes payable

 

 

26,262

 

 

33,765

Deferred income taxes

 

 

—

 

 

146

Other long-term liabilities

 

 

38,910

 

 

35,022

Total liabilities

 

 

852,788

 

 

941,189

Total shareholders' equity

 

 

1,909,443

 

 

1,947,785

Total liabilities and shareholders' equity

 

$

2,762,231

 

$

2,888,974

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended March 31,

(In thousands, except per share amounts)

 

2024

 

2023

Net sales

 

$

769,982

 

 

$

820,593

 

Cost of sales

 

 

380,423

 

 

 

421,093

 

Gross profit

 

 

389,559

 

 

 

399,500

 

Gross margin

 

 

50.6

%

 

 

48.7

%

 

 

 

 

 

Selling, general and administrative expenses

 

 

349,270

 

 

 

347,398

 

Net licensing income

 

 

4,392

 

 

 

4,325

 

Operating income

 

 

44,681

 

 

 

56,427

 

Interest income, net

 

 

9,197

 

 

 

3,283

 

Other non-operating income, net

 

 

271

 

 

 

850

 

Income before income tax

 

 

54,149

 

 

 

60,560

 

Income tax expense

 

 

11,849

 

 

 

14,358

 

Net income

 

$

42,300

 

 

$

46,202

 

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic

 

$

0.71

 

 

$

0.74

 

Diluted

 

$

0.71

 

 

$

0.74

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

 

59,823

 

 

 

62,133

 

Diluted

 

 

59,998

 

 

 

62,417

 

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

(in thousands)

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

Net income

 

$

42,300

 

 

$

46,202

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

15,070

 

 

 

13,834

 

Non-cash lease expense

 

 

18,603

 

 

 

16,749

 

Provision for uncollectible accounts receivable

 

 

1,033

 

 

 

(90

)

Deferred income taxes

 

 

1,232

 

 

 

(85

)

Stock-based compensation

 

 

5,644

 

 

 

5,808

 

Other, net

 

 

(4,198

)

 

 

287

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

50,409

 

 

 

82,927

 

Inventories

 

 

131,721

 

 

 

71,503

 

Prepaid expenses and other current assets

 

 

(511

)

 

 

23,101

 

Other assets

 

 

(2,055

)

 

 

(837

)

Accounts payable

 

 

(77,004

)

 

 

(95,423

)

Accrued liabilities

 

 

(49,050

)

 

 

(59,538

)

Income taxes payable

 

 

(8,128

)

 

 

(10,941

)

Operating lease assets and liabilities

 

 

(18,410

)

 

 

(17,355

)

Other liabilities

 

 

117

 

 

 

1,860

 

Net cash provided by operating activities

 

 

106,773

 

 

 

78,002

 

Cash flows from investing activities:

 

 

 

 

Purchases of short-term investments

 

 

(58,974

)

 

 

(98,203

)

Sales and maturities of short-term investments

 

 

110,878

 

 

 

570

 

Capital expenditures

 

 

(14,795

)

 

 

(14,047

)

Net cash provided by (used in) investing activities

 

 

37,109

 

 

 

(111,680

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of common stock related to stock-based compensation

 

 

1,106

 

 

 

2,678

 

Tax payments related to stock-based compensation

 

 

(4,354

)

 

 

(4,297

)

Repurchase of common stock

 

 

(50,168

)

 

 

(15,293

)

Cash dividends paid

 

 

(17,927

)

 

 

(18,649

)

Net cash used in financing activities

 

 

(71,343

)

 

 

(35,561

)

Net effect of exchange rate changes on cash

 

 

(4,396

)

 

 

47

 

Net increase (decrease) in cash and cash equivalents

 

 

68,143

 

 

 

(69,192

)

Cash and cash equivalents, beginning of period

 

 

350,319

 

 

 

430,241

 

Cash and cash equivalents, end of period

 

$

418,462

 

 

$

361,049

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid during the year for income taxes

 

$

29,070

 

 

$

30,775

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

Property, plant and equipment acquired through increase in liabilities

 

$

3,492

 

 

$

2,899

 

COLUMBIA SPORTSWEAR COMPANY

Reconciliation of GAAP to Non-GAAP Financial Measures

Net Sales Growth - Constant-currency Basis

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

Reported Net Sales

 

Adjust for Foreign Currency

 

Constant- currency

Net Sales

 

Reported Net Sales

 

Reported Net Sales

 

Constant- currency

Net Sales

(In millions, except percentage changes)

 

2024

 

Translation

 

2024(1)

 

2023

 

% Change

 

% Change(1)

Geographical Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

474.4

 

$

—

 

 

$

474.4

 

 

$

517.5

 

(8

)%

 

(8

)%

Latin America and Asia Pacific

 

 

138.7

 

 

6.6

 

 

 

145.3

 

 

 

136.4

 

2

%

 

7

%

Europe, Middle East and Africa

 

 

104.5

 

 

(2.2

)

 

 

102.3

 

 

 

108.3

 

(4

)%

 

(6

)%

Canada

 

 

52.4

 

 

(0.4

)

 

 

52.0

 

 

 

58.4

 

(10

)%

 

(11

)%

Total

 

$

770.0

 

$

4.0

 

 

$

774.0

 

 

$

820.6

 

(6

)%

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Columbia

 

$

663.9

 

$

4.0

 

 

$

667.9

 

 

$

702.8

 

(6

)%

 

(5

)%

SOREL

 

 

45.7

 

 

(0.1

)

 

 

45.6

 

 

 

60.5

 

(24

)%

 

(25

)%

prAna

 

 

31.3

 

 

—

 

 

 

31.3

 

 

 

32.5

 

(4

)%

 

(4

)%

Mountain Hardwear

 

 

29.1

 

 

0.1

 

 

 

29.2

 

 

 

24.8

 

17

%

 

18

%

Total

 

$

770.0

 

$

4.0

 

 

$

774.0

 

 

$

820.6

 

(6

)%

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Product Category Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Apparel, Accessories and Equipment

 

$

619.0

 

$

3.3

 

 

$

622.3

 

 

$

632.6

 

(2

)%

 

(2

)%

Footwear

 

 

151.0

 

 

0.7

 

 

 

151.7

 

 

 

188.0

 

(20

)%

 

(19

)%

Total

 

$

770.0

 

$

4.0

 

 

$

774.0

 

 

$

820.6

 

(6

)%

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Channel Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

$

390.9

 

$

1.1

 

 

$

392.0

 

 

$

452.5

 

(14

)%

 

(13

)%

DTC

 

 

379.1

 

 

2.9

 

 

 

382.0

 

 

 

368.1

 

3

%

 

4

%

Total

 

$

770.0

 

$

4.0

 

 

$

774.0

 

 

$

820.6

 

(6

)%

 

(6

)%

(1) Constant-currency net sales is a non-GAAP financial measure. See “Supplemental Financial Information” above for further information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240425864112/en/

Andrew Burns, CFA Vice President of Investor Relations and Strategic Planning Columbia Sportswear Company (503) 985-4112 aburns@columbia.com