GOLETA, Calif.--(BUSINESS WIRE)-- Deckers Brands (NYSE: DECK), a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, today announced financial results for the fourth fiscal quarter and fiscal year ended March 31, 2018.

Throughout this release, references to Non-GAAP financial measures exclude the impact of certain charges relating to restructuring activities, retail store closures, tax reform and other one-time or non-recurring charges. Additional information regarding these Non-GAAP financial measures is set forth under the heading "Non-GAAP Financial Measures" below.

“We closed fiscal 2018 on a high note as we exceeded expectations for the fifth consecutive quarter," said Dave Powers, President and Chief Executive Officer. “The entire Deckers team stepped up to the plate and performed exceptionally well despite the numerous challenges the organization faced over the last twelve months. For the full year, we achieved record revenue of $1.9 billion, drove a 320 basis point improvement in non-GAAP operating margin to 12.4% and increased non-GAAP diluted earnings per share by 50% to a record $5.74. I am confident that the Company is well positioned to build on its recent financial accomplishments and enhance its industry competitiveness through the continued execution of our operating profit improvement plan and strategic focus."

Fourth Quarter Fiscal 2018 Financial Review

• Net sales increased 8.4% to $400.7 million compared to $369.5 million for the same period last year. On a constant currency basis, net sales increased 6.6%.
• Gross margin was 48.0% compared to 43.0% for the same period last year.
• SG&A expenses were $174.1 million compared to $189.8 million for the same period last year. Non-GAAP SG&A expenses were $172.5 million this year compared to $153.9 million last year.
• Operating income was $18.3 million compared to an operating loss of $30.9 million for the same period last year. Non-GAAP operating income was $19.9 million this year compared to $5.1 million last year.
• Diluted earnings per share was $0.66 compared to a loss of $0.49 for the same period last year. Non-GAAP diluted earnings per share was $0.50 this year compared to $0.11 last year.

Full Year Fiscal 2018 Financial Review

• Net sales increased 6.3% to $1.9 billion compared to $1.8 billion for the same period last year. On a constant currency basis, net sales increased 6.1%.
• Gross margin was 48.9% compared to 46.7% for the same period last year.
• SG&A expenses were $709.1 million compared to $837.2 million for the same period last year. Non-GAAP SG&A expenses were $695.2 million this year compared to $669.6 million last year.
• Operating income was $222.6 million compared to an operating loss of $1.9 million for the same period last year. Non-GAAP operating income was $236.5 million this year compared to $165.6 million last year.
• Diluted earnings per share was $3.58 compared to $0.18 for the same period last year. Non-GAAP diluted earnings per share was $5.74 this year compared to $3.82 last year.

Brand Summary

• UGG® brand net sales for the fourth quarter increased 6.0% to $257.5 million compared to $243.0 million for the same period last year. For fiscal 2018, sales increased 3.9% to $1.5 billion.
• HOKA ONE ONE® brand net sales for the fourth quarter increased 34.1% to $50.4 million compared to $37.6 million for the same period last year. For fiscal 2018, sales increased 46.7% to $153.5 million.
• Teva® brand net sales for the fourth quarter increased 7.3% to $55.0 million compared to $51.3 million for the same period last year. For fiscal 2018, sales increased 13.5% to $133.6 million.
• Sanuk® brand net sales for the fourth quarter increased 10.3% to $35.6 million compared to $32.3 million for the same period last year. For fiscal 2018, sales declined 0.9% to $90.9 million.

Channel Summary (included in the brand sales numbers above)

• Wholesale net sales for the fourth quarter increased 1.8% to $223.1 million compared to $219.1 million for the same period last year. For fiscal 2018, sales increased 5.7% to $1.2 billion.
• DTC net sales for the fourth quarter increased 18.1% to $177.6 million compared to $150.4 million for the same period last year. DTC comparable sales for the fourth quarter increased 15% over the same period last year. For fiscal 2018, sales increased 7.4% to $715.7 million and DTC comparable sales increased 7%.

Geographic Summary (included in the brand and channel sales numbers above)

• Domestic net sales for the fourth quarter increased 8.3% to $249.0 million compared to $230.0 million for the same period last year. For fiscal 2018, sales increased 2.9% to $1.2 billion.
• International net sales for the fourth quarter increased 8.7% to $151.7 million compared to $139.5 million for the same period last year. For fiscal 2018, sales increased 12.4% to $729.3 million.

Balance Sheet (March 31, 2018 as compared to March 31, 2017)

• Cash and cash equivalents were $430.0 million compared to $291.8 million.
• Inventories were $299.6 million compared to $298.9 million.
• Outstanding borrowings were $32.1 million compared to $32.6 million.

Stock Repurchase Program

During the fourth quarter, the Company repurchased approximately 1.34 million shares of its common stock for a total of $125 million. As of March 31, 2018, the Company had $251 million remaining under its $400 million in stock repurchase authorizations.

Full Year Fiscal 2019 Outlook for the Twelve Month Period Ending March 31, 2019

• Net sales are expected to be in the range of $1.925 billion to $1.950 billion.
• Gross margin is expected to be slightly better than 49.0%.
• SG&A expenses as a percentage of sales are projected to be slightly better than 36.5%.
• Operating margin is expected to be in the range of 12.6% to 12.8%.
• Effective tax rate of approximately 22.0%.
• Non-GAAP diluted earnings per share are expected to be in the range of $6.20 to $6.40.
• The earnings per share guidance excludes any charges that may occur from additional store closures, restructuring activities, tax reform and other one-time charges. It also does not assume any impact from additional share repurchases.

First Quarter Fiscal 2019 Outlook for the Three Month Period Ending June 30, 2018

• Net sales are expected to be in the range of $225.0 million to $235.0 million.
• Effective tax rate of approximately 22.0%.
• Non-GAAP net loss per share is expected to be in the range of ($1.50) to ($1.41).
• The earnings per share guidance excludes any charges that may occur from additional store closures, restructuring activities, tax reform and other one-time charges. It also does not assume any impact from additional share repurchases.

Non-GAAP Financial Measures

We present certain Non-GAAP financial measures in this press release, including constant currency, Non-GAAP SG&A expenses, Non-GAAP operating income and Non-GAAP diluted earnings (loss) per share, to provide information that may assist investors in understanding our financial results and assessing our prospects for future performance. We believe these Non-GAAP financial measures are important indicators of our operating performance because they exclude items that are unrelated to, and may not be indicative of, our core operating results, such as charges relating to restructuring activities, retail store closures, tax reform and other one-time or non-recurring charges. In particular, we believe the exclusion of certain costs and charges allows for a more meaningful comparison of our results from period to period. These Non-GAAP measures, as we calculate them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers. For example, in order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements in the condensed consolidated balance sheets. These Non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent we utilize such Non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period. A reconciliation of each of the financial measures to the most directly comparable GAAP measures has been provided under the heading “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” in the financial statement tables included below.

Conference Call Information

The Company’s conference call to review the results for the fourth quarter and fiscal 2018 will be broadcast live today, Thursday, May 24, 2018 at 4:30 pm Eastern Time and hosted at www.deckers.com. You can access the broadcast by clicking on the “Investor” tab and then clicking on the microphone icon at the top of the page.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company’s portfolio of brands includes UGG®, Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally. For more information, please visit www.deckers.com.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our anticipated financial performance, including our projected net sales, margins, expenses, effective tax rate and earnings (loss) per share, as well as statements regarding our operating profit improvement plan, our ability to compete in our industry, our product and brand strategies, and our potential repurchase of shares. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," “could,” "estimate," "expected," "intend," "may," “plan,” “predict,” "project," "should," "will," or “would,” and similar expressions or the negative of these expressions.

Forward-looking statements represent our management’s current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017, as well as in our other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Amounts in thousands, except for per share data)
					Three-month period ended						Twelve-months period ended
					March 31,						March 31,
					2018			2017			2018			2017
Net sales				$	400,684		$	369,465		$	1,903,339		$	1,790,147
Cost of sales					208,255			210,541			971,697			954,912
	Gross profit				192,429			158,924			931,642			835,235
Selling, general and administrative expenses					174,135			189,797			709,058			837,154
	Income (loss) from operations				18,294			(30,873	)		222,584			(1,919	)
Other expense, net					385			591			1,888			5,067
	Income (loss) before income taxes				17,909			(31,464	)		220,696			(6,986	)
Income tax (benefit) expense					(2,706	)		(15,760	)		106,302			(12,696	)
	Net income (loss)				20,615			(15,704	)		114,394			5,710
Other comprehensive income (loss), net of tax
	Unrealized gain (loss) on foreign currency hedging				1,561			84			(613	)		704
	Foreign currency translation adjustment				7,526			3,626			14,081			(6,598	)
		Total other comprehensive income (loss)			9,087			3,710			13,468			(5,894	)
	Comprehensive income (loss)			$	29,702		$	(11,994	)	$	127,862		$	(184	)
Net income (loss) per share:
	Basic			$	0.66		$	(0.49	)	$	3.60		$	0.18
	Diluted			$	0.66		$	(0.49	)	$	3.58		$	0.18
Weighted-average common shares outstanding:
	Basic				31,155			31,944			31,758			32,000
	Diluted				31,360			31,944			31,996			32,355

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
						March 31,			March 31,
				Assets		2018			2017
Current assets:
		Cash and cash equivalents			$	429,970		$	291,764
		Trade accounts receivable, net				143,704			158,643
		Inventories, net				299,602			298,851
		Other current assets				37,414			71,563
			Total current assets			910,690			820,821
Property and equipment, net						220,162			225,531
Other noncurrent assets						133,527			145,428
			Total assets		$	1,264,379		$	1,191,780
				Liabilities and Stockholders' Equity
Current liabilities:
		Short-term borrowings			$	578		$	550
		Trade accounts payable				93,939			95,893
		Other current liabilities				94,649			62,608
			Total current liabilities			189,166			159,051
Long-term liabilities:
		Mortgage payable				31,504			32,082
		Other liabilities				102,930			46,392
			Total long-term liabilities			134,434			78,474
			Total stockholders' equity			940,779			954,255
			Total liabilities and stockholders' equity		$	1,264,379		$	1,191,780

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
DECKERS BRANDS - GAAP to Non-GAAP Reconciliation
For the Three Months Ended March 31, 2018 and March 31, 2017
(Amounts in thousands, except for per share data)
(Unaudited)
					Three-month period ended March 31, 2018
											Non-GAAP
					GAAP Measures			Restructuring and			Measures
					(As Reported)			Other Charges (1)			(Excluding Items) (2)
Net sales				$	400,684					$	400,684
Cost of sales					208,255						208,255
	Gross profit				192,429						192,429
Selling, general and administrative expenses					174,135			(1,594	)		172,541
	Income from operations				18,294			1,594			19,888
Other expense, net					385						385
	Income before income taxes				17,909						19,503
Income tax (benefit) expense					(2,706	)					3,803
	Net income			$	20,615					$	15,700
Net income per share:
	Basic			$	0.66					$	0.50
	Diluted			$	0.66					$	0.50
Weighted-average common shares outstanding:
	Basic				31,155						31,155
	Diluted				31,360						31,360
(1) Amounts as of March 31, 2018 reflect other charges related to organizational changes.
(2) The difference in GAAP and non-GAAP tax expense is primarily due to revisions made during the quarter from one-time deemed repatriation tax as a result of recently enacted U.S. tax reform. The tax rate applied to the non-GAAP measures is 19.5% which represents the effective tax rate for the fiscal quarter ended March 31, 2018.

					Three-month period ended March 31, 2017
											Non-GAAP
					GAAP Measures			Restructuring and			Measures
					(As Reported)			Other Charges (1)			(Excluding Items) (2)
Net sales				$	369,465					$	369,465
Cost of sales					210,541						210,541
	Gross profit				158,924						158,924
Selling, general and administrative expenses					189,797			(35,937	)		153,860
	(Loss) income from operations				(30,873	)		35,937			5,064
Other expense, net					591						591
	(Loss) income before income taxes				(31,464	)					4,473
Income tax (benefit) expense					(15,760	)					1,029
	Net (loss) income			$	(15,704	)				$	3,444
Net (loss) income per share:
	Basic			$	(0.49	)				$	0.11
	Diluted			$	(0.49	)				$	0.11
Weighted-average common shares outstanding:
	Basic				31,944						31,944
	Diluted				31,944						32,200
(1) This amount includes approximately (a) $21,400 of total restructuring charges, which are comprised of lease terminations, retail store asset impairments, severance, software impairments, and other corporate reorganization costs, and (b) $14,500 of other non-core charges, which are comprised of store impairments, sales agent conversion costs, and contract terminations.
(2) The tax rate applied to non-GAAP income before tax is 23.0% for the fiscal quarter ended March 31, 2017, which represents the Company's full-year Non-GAAP effective tax rate.

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
DECKERS BRANDS - GAAP to Non-GAAP Reconciliation
For the Twelve Months Ended March 31, 2018 and March 31, 2017
(Amounts in thousands, except for per share data)
(Unaudited)
					Twelve-month period ended March 31, 2018
										Non-GAAP
					GAAP Measures		Restructuring and			Measures
					(As Reported)		Other Charges (1)			(Excluding Items) (2)
Net sales				$	1,903,339				$	1,903,339
Cost of sales					971,697					971,697
	Gross profit				931,642					931,642
Selling, general and administrative expenses					709,058		(13,872	)		695,186
	Income from operations				222,584		13,872			236,456
Other expense, net					1,888					1,888
	Income before income taxes				220,696					234,568
Income tax expense					106,302					50,888
	Net income			$	114,394				$	183,680
Net income per share:
	Basic			$	3.60				$	5.78
	Diluted			$	3.58				$	5.74
Weighted-average common shares outstanding:
	Basic				31,758					31,758
	Diluted				31,996					31,996
(1) Amounts as of March 31, 2018 reflect charges related to restructuring costs, our contested proxy and related litigation, tax reform, other charges related to organizational changes and the strategic review process.
(2) The difference in GAAP and non-GAAP tax expense is primarily due to the one-time deemed repatriation tax and deferred tax asset re-measurement to the new lower domestic federal tax rate as a result of recently enacted U.S. tax reform. The tax rate applied to the non-GAAP measures is 21.7% for the twelve months ended March 31, 2018.

					Twelve-month period ended March 31, 2017
											Non-GAAP
					GAAP Measures			Restructuring and			Measures
					(As Reported)			Other Charges (1)			(Excluding Items) (2)
Net sales				$	1,790,147					$	1,790,147
Cost of sales					954,912						954,912
	Gross profit				835,235						835,235
Selling, general and administrative expenses					837,154			(167,507	)		669,647
	(Loss) income from operations				(1,919	)		167,507			165,588
Other expense, net					5,067						5,067
	(Loss) income before income taxes				(6,986	)					160,521
Income tax (benefit) expense					(12,696	)					36,920
	Net income			$	5,710					$	123,601
Net income per share:
	Basic			$	0.18					$	3.86
	Diluted			$	0.18					$	3.82
Weighted-average common shares outstanding:
	Basic				32,000						32,000
	Diluted				32,355						32,355
(1) This amount includes approximately (a) $118,000 of Sanuk goodwill and patent impairment charges, (b) $29,100 of total restructuring charges, which are comprised of lease terminations, retail store asset impairments, severance costs, software impairments, and other corporate reorganization costs, and (c) $20,400 of other non-core charges, which are comprised of store impairments, sales agent conversion costs, and contract terminations.
(2) The tax rate applied to non-GAAP income before tax is 23.0% for the twelve months ended March 31, 2017.

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Deckers Brands

Investor Contact:

Steve Fasching | SVP, Corporate Strategy, Planning & Investor Relations

805.967.7611

Source: Deckers Brands

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