FORWARD-LOOKING STATEMENTS
Statements in this Quarterly Report on Form 10-Q, including, without limitation,
statements under Item 2 "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report, as well as
statements in future filings by the Company with the Securities and Exchange
Commission (the "SEC"), in the Company's press releases and oral statements made
by or with the approval of an authorized executive officer of the Company, which
are not historical in nature, are intended to be, and are hereby identified as,
"forward-looking statements" for purposes of the safe harbor provided by the
Private Securities Litigation Reform Act of 1995. These statements are based on
current expectations, estimates, forecasts and projections about the Company,
its future performance, the industry in which the Company operates and
management's assumptions. Words such as "expects", "anticipates", "targets",
"goals", "projects", "intends", "plans", "believes", "seeks", "estimates",
"may", "will", "should" and variations of such words and similar expressions are
also intended to identify such forward-looking statements. The Company cautions
readers that forward-looking statements include, without limitation, those
relating to the Company's future business prospects, projected operating or
financial results, revenues, working capital, liquidity, capital needs,
inventory levels, plans for future operations, expectations regarding capital
expenditures, operating efficiency initiatives and other items, cost savings
initiatives, and operating expenses, effective tax rates, margins, interest
costs, and income as well as assumptions relating to the foregoing.
Forward-looking statements are subject to certain risks and uncertainties, some
of which cannot be predicted or quantified. Actual results and future events
could differ materially from those indicated in the forward-looking statements,
due to several important factors herein identified, among others, and other
risks and factors identified from time to time in the Company's reports filed
with the SEC, including, without limitation, the following: general economic and
business conditions which may impact disposable income of consumers in the
United States and the other significant markets (including Europe) where the
Company's products are sold; uncertainty regarding such economic and business
conditions; trends in consumer debt levels and bad debt write-offs; general
uncertainty related to possible terrorist attacks, natural disasters, pandemics,
including the effect of the COVID-19 pandemic and other diseases on travel and
traffic in the Company's retail stores and the stores of its wholesale
customers; supply disruptions and delivery delays from the Company's suppliers
as a result of the COVID-19 pandemic; adverse impact on the Company's wholesale
customers and customer traffic in the Company's stores as a result of increased
uncertainty and economic disruption caused by the COVID-19 pandemic; uncertainty
relating to the availability and efficacy of vaccines and treatments for
COVID-19; the impact of the United Kingdom's exit from the European Union;
defaults on or downgrades of sovereign debt and the impact of any of those
events on consumer spending; changes in consumer preferences and popularity of
particular designs, new product development and introduction; decrease in mall
traffic and increase in e-commerce; the ability of the Company to successfully
implement its business strategies, competitive products and pricing; the impact
of "smart" watches and other wearable tech products on the traditional watch
market; seasonality; availability of alternative sources of supply in the case
of the loss of any significant supplier or any supplier's inability to fulfill
the Company's orders; the loss of or curtailed sales to significant customers;
the Company's dependence on key employees and officers; the ability to
successfully integrate the operations of acquired businesses without disruption
to other business activities; the possible impairment of acquired intangible
assets including goodwill if the carrying value of any reporting unit were to
exceed its fair value; volatility in reported earnings resulting from changes in
the estimated fair value of contingent acquisition consideration; the
continuation of the Company's major warehouse and distribution centers; the
continuation of licensing arrangements with third parties; losses possible from
pending or future litigation and administrative proceedings; the ability to
secure and protect trademarks, patents and other intellectual property rights;
the ability to lease new stores on suitable terms in desired markets and to
complete construction on a timely basis; the ability of the Company to
successfully manage its expenses on a continuing basis; information systems
failure or breaches of network security; complex and quickly-evolving
regulations regarding privacy and data protection; the continued availability to
the Company of financing and credit on favorable terms; business disruptions;
and general risks associated with doing business outside the United States
including, without limitation, import duties, tariffs (including retaliatory
tariffs), quotas, political and economic stability, changes to existing laws or
regulations, and success of hedging strategies with respect to currency exchange
rate fluctuations.
These risks and uncertainties, along with the risk factors discussed under Item
1A. "Risk Factors" in the Company's 2021 Annual Report on Form 10-K, should be
considered in evaluating any forward-looking statements contained in this report
or incorporated by reference herein. All forward-looking statements speak only
as of the date of this report or, in the case of any document incorporated by
reference, the date of that document. All subsequent written and oral
forward-looking statements attributable to the Company or any person acting on
its behalf are qualified by the cautionary statements in this section. The
Company undertakes no obligation to update or publicly release any revisions to
forward-looking statements to reflect events, circumstances or changes in
expectations after the date of this report.
23
--------------------------------------------------------------------------------
Critical Accounting Policies and Estimates
The Company's Consolidated Financial Statements have been prepared in accordance
with accounting principles generally accepted in the United States and those
significant policies are more fully described in Note 1 to the Company's
consolidated financial statements. The preparation of these financial statements
and the application of certain critical accounting policies require management
to make judgments based on estimates and assumptions that affect the information
reported. On an on-going basis, management evaluates its estimates and
judgments, including those related to sales discounts and markdowns, product
returns, bad debt, inventories, income taxes, warranty obligations, useful lives
of property, plant and equipment, impairments, stock-based compensation and
contingencies and litigation. Management bases its estimates and judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources on historical experience, contractual commitments and on various
other factors that are believed to be reasonable under the circumstances. Actual
results could differ from these estimates.
Critical accounting policies are those that are most important to the portrayal
of the Company's financial condition and the results of operations and require
management's most difficult, subjective and complex judgments as a result of the
need to make estimates about the effect of matters that are inherently
uncertain. The Company's most critical accounting policies have been discussed
in the Company's 2021 Annual Report on Form 10-K and are incorporated by
reference herein. As of July 31, 2021, there have been no material changes to
any of the Company's critical accounting policies.
Overview
The Company conducts its business in two operating segments: Watch and Accessory
Brands and Company Stores. The Company's Watch and Accessory Brands segment
includes the designing, manufacturing and distribution of watches and, to a
lesser extent, jewelry and other accessories, of owned and licensed brands, in
addition to revenue generated from after-sales service activities and shipping.
The Company Stores segment includes the Company's retail outlet business in the
United States and Canada. The Company also operates in two major geographic
locations: United States and International, the latter of which includes the
results of all non-U.S. Company operations.
The Company divides its watch and accessory business into two principal
categories: the owned brands category and the licensed brands category. The
owned brands category consists of the Movado®, Concord®, Ebel®, Olivia Burton®
and MVMT® brands. Products in the licensed brands category include the following
brands manufactured and distributed under license agreements with the respective
brand owners: Coach®, Tommy Hilfiger®, HUGO BOSS®, Lacoste® and SCUDERIA
FERRARI®.
Gross margins vary among the brands included in the Company's portfolio and also
among watch models within each brand. Watches in the Company's owned brands
category generally earn higher gross margin percentages than watches in the
licensed brands category. The difference in gross margin percentages within the
licensed brands category is primarily due to the impact of royalty payments made
on the licensed brands. Gross margins in the Company's e-commerce business
generally earn higher gross margin percentages than those of the traditional
wholesale business. Gross margins in the Company's outlet business are affected
by the mix of product sold and may exceed those of the wholesale business since
the Company earns margins on its outlet store sales from manufacture to point of
sale to the consumer.
Recent Developments and Initiatives
COVID-19
The COVID-19 pandemic and related public health measures materially impacted the
Company's operating results for the fiscal year ended January 31, 2021 and
continue to materially affect how we and our customers and suppliers operate our
businesses. For example, temporary closures and other restrictions affecting
brick and mortar retail stores resulted in sales declines in the Company's
outlet stores and in its wholesale business during fiscal 2021 relative to the
prior year period. These declines were partially offset by strong growth in
e-commerce sales, by both the Company and many of its retail customers. In
addition, during the 2021 fiscal year and continuing through the second quarter
of fiscal 2022, the Company has implemented remote work policies and employed
additional safety measures for people continuing critical on-site work. These
policies and measures have caused strain for, and may have adversely impacted
the productivity of, certain employees.
The Company expects adverse impacts on net sales to continue in fiscal 2022 in
its retail and wholesale channels as consumers continue to follow social
distancing requirements or recommendations and other safety measures, which may
decrease demand for our products as consumers have fewer occasions to use and
wear our products, as well as face layoffs and other negative economic impacts
from the COVID-19 outbreak that adversely affect their disposable income and
discretionary purchases. These trends could worsen if COVID-19 infections
increase as new variants and strains emerge or if treatments and vaccines are
not as effective as expected. The ongoing impact of the outbreak of COVID-19 on
the Company's liquidity, revenues, impairment considerations surrounding the
Company's long-lived assets and results of operations cannot be reasonably
predicted at this time due to the high level of uncertainty regarding
24
--------------------------------------------------------------------------------
future developments, the duration of containment measures, the speed at which
vaccines are administered to the general public and the timeline for recovery.
The global macroeconomic effects of the pandemic as well as the microeconomic
effects on our customers, consumers and their purchasing decisions may persist
for an indeterminable period even after the pandemic has subsided.
In response to this challenging environment, while the Company's focus has
remained on the health and safety of its associates, customers and business
partners, the Company has taken and continues to take the following actions:
Revenue-Generating Activities
?
Enhancing the Company's e-commerce platforms and ensuring that distribution
centers remain operational across all major regions; and
?
Supporting the Company's wholesale customers as local containment measures ease
throughout the world.
Minimizing Non-Essential Operating Costs Across All Key Areas of Spend
?
Driving SG&A savings by minimizing non-essential operating costs, right-sizing
marketing expenses to the lower revenue base while maintaining a focus on
digital, and driving procurement savings, including by reducing third party
services. These initiatives resulted in fiscal 2021 SG&A savings of
approximately $90 million (Organizational Costs savings included in this $90
million are detailed below) as compared to the prior year. The Company currently
anticipates that approximately a third of these savings will recur in fiscal
2022.
Strengthening the Company's Balance Sheet and Enhancing Financial Flexibility
?
Adapting our inventory management to more precisely take account of market
conditions and expected demand; and
?
Reducing capital expenditures while prioritizing investment in high-return
projects particularly in digital.
Preserving Liquidity
?
Suspending the share repurchase program during fiscal 2021. The Company
subsequently announced on March 25, 2021 the establishment of a new share
repurchase program under which the Company is authorized to purchase up to $25.0
million of its outstanding common stock from time to time; and
?
Suspending the Company's regular quarterly cash dividend during fiscal 2021. The
Company subsequently paid a cash dividend of $0.10 per share on February 5, 2021
and paid a cash dividend of $0.20 per share on each of April 21, 2021 and June
23, 2021.
Addressing Organizational Costs
?
Applied for and received an aggregate of approximately $6.0 million in
government payroll subsidy programs in various countries in fiscal 2021 to
mitigate payroll expense;
?
Furloughed approximately 80% of the Company's North American workforce from
early April generally through early August 2020, resulting in compensation
expense savings of approximately $10.5 million;
?
Reduced salaries during the furlough period of all active salaried employees by
15% to 25%, except for Chairman and Chief Executive Officer Efraim Grinberg, who
volunteered to forego all salary during the furlough period. The Board of
Directors also waived the cash portion of their compensation during that period.
These actions resulted in compensation expense savings of approximately $1.5
million;
?
Froze the Company's match on executive deferred compensation plans and the
Company's 401(k) match from early April through the end of fiscal 2021, with
such matches being resumed in the first quarter of fiscal 2022. The freeze
resulted in compensation expense savings of approximately $1.3 million; and
?
Implemented a permanent workforce reduction that resulted in approximately $9
million of savings in fiscal 2021 and is expected to result in savings in the
range of $14 million to $16 million in fiscal year 2022.
The Company will continue to consider near-term demands and the long-term
financial health of the business as steps are taken to mitigate the consequences
of the COVID-19 pandemic and the uncertain business environment.
25
--------------------------------------------------------------------------------
Fiscal 2021 Impairments
During the three months ended April 30, 2020, in light of the COVID-19 pandemic
that resulted in the closing of the Company's stores and of the vast majority of
the stores of the Company's wholesale customers (resulting in a decrease in
revenues and gross margin), a decrease in customer spending and the recent
decline in global equity markets, the Company concluded that a triggering event
had occurred during the first quarter of fiscal 2021, resulting in the need to
perform a quantitative interim impairment assessment over the Company's Olivia
Burton, MVMT and Company Stores' long-lived assets as well as the Watch and
Accessory Brands reporting unit.
The Company made revisions to its internal forecasts, resulting in a reduction
in both current and future expected cash flows, due to the COVID-19 pandemic and
the uncertain business environment. As a result, during the first quarter of
fiscal 2021, the Company recorded impairment charges related to goodwill of
$133.7 million and intangible assets related to MVMT's tradename and customer
relationships of $22.2 million.
Results of Operations Overview
The following is a discussion of the results of operations for the three and six
months ended July 31, 2021 compared to the three and six months ended July 31,
2020, along with a discussion of the changes in financial condition during the
first six months of fiscal 2022. The Company's results of operations for the
first six months of fiscal 2022 should not be deemed indicative of the results
that we will experience for the full year of fiscal 2022. See "Recent
Developments and Initiatives" above. See also "Risk Factors" of our Annual
Report on Form 10-K for the fiscal year ended January 31, 2021 filed with the
Securities and Exchange Commission on March 25, 2021.
Results of operations for the three months ended July 31, 2021 as compared to
the three months ended July 31, 2020
Net Sales: Comparative net sales by business segment were as follows (in
thousands):
Three Months Ended
July 31,
2021 2020
Watch and Accessory Brands:
United States $ 58,688 $ 24,895
International 87,491 53,294
Total Watch and Accessory Brands 146,179 78,189
Company Stores:
United States 26,799 9,871
International 896 478
Total Company Stores 27,695 10,349
Net Sales $ 173,874 $ 88,538
Comparative net sales by categories were as follows (in thousands):
Three Months Ended
July 31,
2021 2020
Watch and Accessory Brands:
Owned brands category $ 60,902 $ 31,622
Licensed brands category 84,077 46,414
After-sales service and all other 1,200 153
Total Watch and Accessory Brands 146,179 78,189
Company Stores 27,695 10,349
Net Sales $ 173,874 $ 88,538
Net Sales
Net sales for the three months ended July 31, 2021 were $173.9 million, $85.3
million or 96.4% above the prior year period. This increase is primarily as a
result of the partial recovery from the ongoing COVID-19 pandemic. For the three
months ended July 31, 2021, fluctuations in foreign currency exchange rates
positively impacted net sales by $5.2 million when compared to the prior year
period.
26
--------------------------------------------------------------------------------
Watch and Accessory Brands Net Sales
Net sales for the three months ended July 31, 2021 in the Watch and Accessory
Brands segment were $146.2 million, above the prior year period by $68.0
million, or 87.0%. The increase in net sales was primarily due to growth in
online retailers, both in the Company's owned and wholesale customers'
e-commerce websites, and growth in the Company's wholesale customers due to the
partial recovery from the ongoing COVID-19 pandemic. Prior period net sales were
negatively impacted by closures and restrictions affecting the stores of the
Company's wholesale customers during a portion of the period due to the COVID-19
pandemic. Some of these restrictions have continued into fiscal 2022. There were
increases in net sales in both the United States and International locations of
the Watch and Accessory Brands segment.
United States Watch and Accessory Brands Net Sales
Net sales for the three months ended July 31, 2021 in the United States
locations of the Watch and Accessory Brands segment were $58.7 million, above
the prior year period by $33.8 million, or 135.7%, resulting from net sales
increases across all brands in both the owned and licensed brand categories
primarily due to the partial recovery from the ongoing COVID-19 pandemic. The
net sales recorded in the owned brands category increased by $26.3 million, or
129.8%, and net sales recorded in the licensed brand category increased $6.4
million, or 134.6%.
International Watch and Accessory Brands Net Sales
Net sales for the three months ended July 31, 2021 in the International
locations of the Watch and Accessory Brands segment were $87.5 million, above
the prior year by $34.2 million, or 64.2%, which included fluctuations in
foreign currency exchange rates which favorably impacted net sales by $5.2
million when compared to the prior year period. The increase in net sales was
across most brands in both the owned and licensed brand categories primarily due
to the partial recovery from the ongoing COVID-19 pandemic. The net sales
increase recorded in the owned brands category was $2.9 million, or 26.0% and is
due to sales increases in all regions. The net sales increase in the licensed
brands category was $31.3 million, or 75.1%, due to net sales increases in all
regions.
Company Stores Net Sales
Net sales for the three months ended July 31, 2021 in the Company Stores segment
were $27.7 million, $17.3 million or 167.6% above the prior year period. The net
sales increase is primarily the result of all of the Company's retail stores
being open during the period as compared to the closure of the Company's retail
stores during part of the prior year period in response to the COVID-19 pandemic
and lessened restrictions on the Company's retail stores during the period as
compared to the same period in the prior year. As of July 31, 2021 and 2020, the
Company operated 49 and 47 retail outlet locations, respectively.
Gross Profit
Gross profit for the three months ended July 31, 2021 was $98.5 million or 56.6%
of net sales as compared to $45.4 million or 51.2% of net sales in the prior
year period. The increase in gross profit of $53.1 million was primarily due to
higher net sales combined with a higher gross margin percentage. The increase in
the gross margin percentage of approximately 540 basis points for the three
months ended July 31, 2021 resulted primarily from a favorable impact of sales
mix of approximately 500 basis points and a positive impact of fluctuations in
foreign exchange rates of approximately 80 basis points, partially offset by
approximately 40 basis points resulting primarily from increased spending on
certain fixed costs mainly due to the non-reoccurrence of the furloughing of
employees and temporary salary reductions during a portion of the prior year
period in response to the COVID-19 pandemic.
Selling, General and Administrative ("SG&A")
SG&A expenses for the three months ended July 31, 2021 were $73.8 million,
representing an increase from the prior year period of $19.5 million, or 36.0%.
The prior year period included corporate initiative charges primarily in
response to the COVID-19 pandemic of $7.4 million consisting of $7.0 million in
severance and payroll related and $0.4 million in other restructuring charges.
Excluding these charges SG&A expenses would have increased $26.9 million
primarily from higher marketing expenses of $11.8 million; an increase in
payroll related expenses of $6.9 million primarily due to the non-reoccurrence
of the furloughing of employees and temporary salary reductions during a portion
of the prior year period in response to the COVID-19 pandemic; an increase in
performance-based compensation of $4.6 million; an increase of $1.4 million in
consulting and recruiting charges and an increase in credit card fees and sales
commissions of $1.2 million due to higher sales in the current year period as
compared to the prior year period. For the three months ended July 31, 2021,
fluctuations in foreign currency rates related to the foreign subsidiaries
negatively impacted SG&A expenses by $0.7 million when compared to the prior
year period.
Watch and Accessory Brands Operating Income/(Loss)
For the three months ended July 31, 2021, the Company recorded operating income
of $15.7 million in the Watch and Accessory Brands segment which includes $13.0
million of unallocated corporate expenses as well as $16.9 million of certain
intercompany profits related
27
--------------------------------------------------------------------------------
to the Company's supply chain operations. For the three months ended July 31,
2020, the Company recorded an operating loss of $9.9 million in the Watch and
Accessory Brands segment which included $6.1 million of unallocated corporate
expenses as well as $11.2 million of certain intercompany profits related to the
Company's supply chain operations. The increase in operating income was the
result of an increase in gross profit of $41.1 million, partially offset by an
increase in SG&A expenses of $15.5 million when compared to the prior year
period. The SG&A expenses for the prior year period included corporate
initiatives charges primarily in response to the COVID-19 pandemic of $7.4
million consisting of $7.0 million in severance and payroll related and $0.4
million in other restructuring charges. Without these charges SG&A expense would
have increased $22.9 million. The increase in gross profit was the result of
higher sales combined with a higher gross margin percentage. The underlying
increase in SG&A expenses of $22.9 million resulted primarily from higher
marketing expenses of $10.7 million; an increase in payroll related expenses of
$5.2 million primarily due to the non-reoccurrence of the furloughing of
employees and temporary salary reductions during a portion of the prior year
period in response to the COVID-19 pandemic; an increase in performance-based
compensation of $4.5 million; an increase of $1.4 million in consulting and
recruiting charges and an increase in credit card fees and sales commissions of
$0.6 million due to higher sales in the current year period as compared to the
prior year period. For the three months ended July 31, 2021, fluctuations in
foreign currency exchange rates positively impacted the Watch and Accessory
Brands segment operating income by $1.6 million when compared to the prior year
period.
U.S. Watch and Accessory Brands Operating Income/(Loss)
In the United States locations of the Watch and Accessory Brands segment, for
the three months ended July 31, 2021, the Company recorded operating income of
$0.6 million which includes unallocated corporate expenses of $13.0 million. For
the three months ended July 31, 2020 the Company recorded an operating loss of
$15.2 million in the United States locations of the Watch and Accessory Brands
segment which included unallocated corporate expenses of $6.1 million. The
improvement in operating income was the result of higher gross profit of $23.4
million, partially offset by an increase in SG&A expenses of $7.6 million when
compared to the prior year period. The SG&A expenses for the prior year period
included corporate initiatives charges primarily in response to the COVID-19
pandemic of $6.6 million consisting of $6.2 million in severance and payroll
related and $0.4 million in other restructuring charges. Without these charges
SG&A expense would have increased $14.2 million. The increase in gross profit of
$23.4 million was due to higher sales, combined with a higher gross margin
percentage. The underlying increase in SG&A expenses of $14.2 million resulted
primarily from higher marketing expenses of $5.5 million; an increase in
performance-based compensation of $4.5 million; an increase in payroll related
expenses of $2.9 million primarily due to the non-reoccurrence of the
furloughing of employees and temporary salary reductions during a portion of the
prior year period in response to the COVID-19 pandemic; an increase of $0.7
million in consulting and recruiting charges and an increase in credit card fees
of $0.3 million due to higher sales in the current year period as compared to
the prior year period.
International Watch and Accessory Brands Operating Income
In the International locations of the Watch and Accessory Brands segment, for
the three months ended July 31, 2021, the Company recorded operating income of
$15.1 million which includes $16.9 million of certain intercompany profits
related to the Company's International supply chain operations. For the three
months ended July 31, 2020 the Company recorded operating income of $5.3 million
in the International locations of the Watch and Accessory Brands segment which
included which included $11.2 million of certain intercompany profits related to
the Company's supply chain operations. The increase in operating income was
primarily related to a higher gross profit of $17.7 million, partially offset
with higher SG&A expenses of $7.9 million. The SG&A expenses for the prior year
period included corporate initiatives charges primarily in response to the
COVID-19 pandemic of $0.8 million in severance and payroll related. Without
these charges SG&A expense would have increased $8.7 million. The increase in
gross profit of $17.7 million was due to higher net sales combined with a higher
gross margin percentage. The underlying increase in SG&A expenses of $8.7
million resulted primarily from higher marketing expenses of $5.2 million; an
increase in payroll related expenses of $2.3 million primarily as a result of
the non-reoccurrence of the furloughing of employees and temporary salary
reductions during a portion of the prior year period in response to the COVID-19
pandemic; an increase of $0.7 million in consulting and recruiting charges and
an increase of $0.3 million in sales commissions due to higher sales in the
current year period as compared to the prior year period. Fluctuation in foreign
currency exchange rates positively impacted operating income by $1.6 million
when compared to the prior year period.
Company Stores Operating Income/(Loss)
The Company recorded operating income of $8.9 million and $1.0 million in the
Company Stores segment for the three months ended July 31, 2021 and 2020,
respectively. The increase in operating income of $7.9 million was primarily
related to higher gross profit of $11.9 million mainly due to higher sales and a
higher gross margin percentage, partially offset by a $4.0 million increase in
SG&A expenses. The increase in SG&A expenses was primarily due to higher
marketing expenses of $1.1 million; an increase in payroll related expenses of
$1.7 million primarily due to company stores being open throughout the period
(as compared to the significant closures during the prior year period) and an
increase in credit card fees and sales commissions of $0.6 million due to higher
sales in the current year period as compared to the prior year period. As of
July 31, 2021, and 2020, the Company operated 49 and 47 retail outlet locations,
respectively.
28
--------------------------------------------------------------------------------
Other Non-Operating Income
The Company recorded other income of $0.3 million primarily due to the final
settlement related to a sale of a building in an international location in the
prior year period and the non-service components of the Company's Swiss pension
plan for the three months ended July 31, 2021.
The Company recorded a gain on sale of a non-operating asset of $1.3 million
related to a sale of a building in an international location for the three
months ended July 31, 2020.
Interest Expense
Interest expense was $0.2 million and $0.6 million for the three months ended
July 31, 2021 and 2020, respectively. The decrease was primarily due to lower
weighted average borrowings outstanding under the Company's revolving credit
facility and a lower weighted average interest rate partially offset by higher
unused credit line fees during the three months ended July 31, 2021 as compared
to the three months ended July 31, 2020.
Income Taxes
The Company recorded an income tax provision of $5.3 million and an income tax
benefit of $1.6 million for the three months ended July 31, 2021 and 2020,
respectively.
The effective tax rate was 21.5% and 19.1% for the three months ended July 31,
2021 and 2020, respectively. The significant components of the effective tax
rate changed primarily due to prior year impairments of the portion of goodwill
of the Watch and Accessory Brands reporting unit which is not tax deductible,
partially offset by a change in the tax rate for the Company's subsidiary in the
United Kingdom in the prior year and changes in jurisdictional earnings.
Net Income/(Loss) Attributable to Movado Group, Inc.
The Company recorded net income attributable to Movado Group, Inc. of $19.4
million and net loss attributable to Movado Group, Inc. of $6.6 million, for the
three months ended July 31, 2021 and 2020, respectively.
Results of operations for the six months ended July 31, 2021 as compared to the
six months ended July 31, 2020
Net Sales: Comparative net sales by business segment were as follows (in
thousands):
Six Months Ended
July 31,
2021 2020
Watch and Accessory Brands:
United States $ 106,555 $ 47,202
International 155,903 94,273
Total Watch and Accessory Brands 262,458 141,475
Company Stores:
United States 44,825 16,098
International 1,389 631
Total Company Stores 46,214 16,729
Net Sales $ 308,672 $ 158,204
29
--------------------------------------------------------------------------------
Comparative net sales by categories were as follows (in thousands):
Six Months Ended
July 31,
2021 2020
Watch and Accessory Brands:
Owned brands category $ 109,273 $ 56,983
Licensed brands category 151,703 82,098
After-sales service and all other 1,482 2,394
Total Watch and Accessory Brands 262,458 141,475
Company Stores 46,214 16,729
Net Sales $ 308,672 $ 158,204
Net Sales
Net sales for the six months ended July 31, 2021 were $308.7 million, $150.5
million or 95.1% above the prior year period. This increase is primarily as a
result of the partial recovery from the ongoing COVID-19 pandemic. For the six
months ended July 31, 2021, fluctuations in foreign currency exchange rates
positively impacted net sales by $9.6 million when compared to the prior year
period.
Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2021 in the Watch and Accessory
Brands segment were $262.5 million, above the prior year period by $121.0
million, or 85.5%. The increase in net sales was primarily due to growth in
online retailers, both in the Company's owned and wholesale customers'
e-commerce websites, and growth in the Company's wholesale customers due to the
partial recovery from the ongoing COVID-19 pandemic. Prior period net sales were
negatively impacted by closures and restrictions affecting the stores of the
Company's wholesale customers during a portion of the period due to the COVID-19
pandemic. Some of these restrictions have continued into fiscal 2022. There were
increases in net sales in both the United States and International locations of
the Watch and Accessory Brands segment.
United States Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2021 in the United States locations
of the Watch and Accessory Brands segment were $106.6 million, above the prior
year period by $59.4 million, or 125.7%, resulting from net sales increases
across all brands in both the owned and licensed brand categories primarily due
to the partial recovery from the ongoing COVID-19 pandemic. The net sales
recorded in the owned brands category increased by $47.4 million, or 129.8%, and
net sales recorded in the licensed brand category increased $12.5 million, or
129.3%.
International Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2021 in the International locations
of the Watch and Accessory Brands segment were $155.9 million, above the prior
year by $61.6 million, or 65.4%, which included fluctuations in foreign currency
exchange rates which favorably impacted net sales by $9.6 million when compared
to the prior year period. The increase in net sales was across most brands in
both the owned and licensed brand categories primarily due to the partial
recovery from the ongoing COVID-19 pandemic. The net sales increase recorded in
the owned brands category was $4.9 million, or 24.0% and is due to sales
increases in all regions. The net sales increase in the licensed brands category
was $57.1 million, or 78.8%, due to net sales increases in all regions.
Company Stores Net Sales
Net sales for the six months ended July 31, 2021 in the Company Stores segment
were $46.2 million, $29.5 million or 176.3% above the prior year period. The net
sales increase is primarily the result of all of the Company's retail stores
being open during the period as compared to the closure of the Company's retail
stores during part of the prior year period in response to the COVID-19 pandemic
and lessened restrictions on the Company's retail stores during the period as
compared to the same period in the prior year. As of July 31, 2021 and 2020, the
Company operated 49 and 47 retail outlet locations, respectively.
Gross Profit
Gross profit for the six months ended July 31, 2021 was $172.7 million or 55.9%
of net sales as compared to $77.2 million or 48.8% of net sales in the prior
year period. The increase in gross profit of $95.4 million was primarily due to
higher net sales combined with a higher gross margin percentage. The increase in
the gross margin percentage of approximately 710 basis points for the six months
ended July 31, 2021 resulted primarily from a favorable impact of sales mix of
approximately 330 basis points, the non-recurrence of a prior year charge
related to an increase in inventory reserves in response to the COVID-19
pandemic of approximately 220 basis points,
30
--------------------------------------------------------------------------------
increased leveraging of certain fixed costs as a result of higher sales of
approximately 80 basis points and a positive impact of fluctuations in foreign
exchange rates of approximately 80 basis points.
Selling, General and Administrative ("SG&A")
SG&A expenses for the six months ended July 31, 2021 were $134.8 million,
representing an increase from the prior year period of $22.4 million, or 19.9%.
The prior year period included corporate initiative charges primarily in
response to the COVID-19 pandemic of $11.1 million consisting of $7.9 million in
severance and payroll related, $1.5 million in write-off of unrefunded trade
show deposits, $1.1 million in additional accounts receivable reserves and $0.6
million in other restructuring charges. Excluding these charges SG&A expenses
would have increased $33.5 million primarily from higher marketing expenses of
$18.5 million; an increase in performance-based compensation of $6.5 million; an
increase in payroll related expenses of $5.7 million primarily due to the
non-reoccurrence of the furloughing of employees and temporary salary reductions
during a portion of the prior year period in response to the COVID-19 pandemic
and an increase in credit card fees and sales commissions of $2.1 million due to
higher sales in the current year period as compared to the prior year period.
The increase in SG&A was partially offset by a decrease of $0.5 million in
customer and sales promotions. For the six months ended July 31, 2021,
fluctuations in foreign currency rates related to the foreign subsidiaries
negatively impacted SG&A expenses by $1.7 million when compared to the prior
year period.
Impairment of Goodwill and Intangible Assets
As a result of the economic conditions caused by the response to COVID-19, the
Company performed a quantitative assessment of its goodwill and long-lived
intangible assets at April 30, 2020. The Company recorded a goodwill impairment
of $133.7 million related to the Company's Watch and Accessory Brands reporting
unit as the carrying value of goodwill exceeded the fair value at April 30,
2020. The Company also recorded a $22.2 million impairment charge related to
MVMT's trade name and customer relationships as the carrying amount of these
long-lived intangible assets exceeded the fair value.
Watch and Accessory Brands Operating Income/(Loss)
For the six months ended July 31, 2021 the Company recorded operating income of
$24.5 million in the Watch and Accessory Brands segment which includes $21.9
million of unallocated corporate expenses as well as $30.8 million of certain
intercompany profits related to the Company's supply chain operations. For the
six months ended July 31, 2020, the Company recorded an operating loss of $189.6
million in the Watch and Accessory Brands segment, which included goodwill and
intangible asset impairment charges of $133.7 million and $22.2 million,
respectively. Without these charges, for the six months ended July 31, 2020,
operating loss would have been $33.6 million which included $12.1 million of
unallocated corporate expenses as well as $22.3 million of certain intercompany
profits related to the Company's supply chain operations. In addition to the
asset impairments in the prior year period, the increase in operating income was
the result of an increase in gross profit of $74.6 million, which included
corporate initiatives costs in the prior year period of $3.5 million comprising
an increase in inventory reserves, partially offset by an increase in SG&A
expenses of $16.5 million when compared to the prior year period. The SG&A
expenses for the prior year period included corporate initiatives charges
primarily in response to the COVID-19 pandemic of $11.1 million consisting of
$7.9 million in severance and payroll related, $1.5 million in write-off of
unrefunded trade show deposits, $1.1 million in additional accounts receivable
reserves and $0.6 million in other restructuring charges. Without these charges
SG&A expense would have increased $27.6 million. The increase in gross profit
was the result of higher sales combined with a higher gross margin percentage.
The underlying increase in SG&A expenses of $27.6 million resulted primarily
from higher marketing expenses of $16.7 million; an increase in
performance-based compensation of $6.1 million; an increase in payroll related
expenses of $3.6 million primarily due to the non-reoccurrence of the
furloughing of employees and temporary salary reductions during a portion of the
prior year period in response to the COVID-19 pandemic and an increase in credit
card fees and sales commissions of $1.3 million due to higher sales in the
current year period as compared to the prior year period. The increase in SG&A
expense was partially offset by a decrease of $0.5 million in customer and sales
promotions. For the six months ended July 31, 2021, fluctuations in foreign
currency exchange rates positively impacted the Watch and Accessory Brands
segment operating income by $2.6 million when compared to the prior year period.
U.S. Watch and Accessory Brands Operating Loss
In the United States locations of the Watch and Accessory Brands segment, for
the six months ended July 31, 2021, the Company recorded an operating loss of
$3.5 million, which includes unallocated corporate expenses of $21.9 million.
For the six months ended July 31, 2020 the Company recorded an operating loss of
$132.8 million in the United States locations of the Watch and Accessory Brands
segment which included goodwill and intangible asset impairment charges of $77.5
million and $22.2 million, respectively. Without these charges, for the six
months ended July 31, 2020, operating loss would have been $33.1 million, which
included unallocated corporate expenses of $12.1 million. In addition to these
assets impairments in the prior year period, the decrease in operating loss was
the result of higher gross profit of $41.9 million, which included corporate
initiative costs in the prior year period of $3.5 million comprising an increase
in inventory reserves, partially offset by an increase in SG&A expenses of $12.3
million when compared to the prior year period. The SG&A expenses for the prior
year period included corporate initiatives charges primarily in response to the
COVID-19 pandemic of $7.8 million primarily consisting of $6.3 million in
severance and payroll related, $1.1 million in additional accounts receivable
reserves and $0.3 million in other restructuring charges. Without these charges
SG&A expense would have increased $20.1 million. The increase in gross profit of
$41.9 million was due to higher sales, combined with a higher gross margin
percentage.
31
--------------------------------------------------------------------------------
The underlying increase in SG&A expenses of $20.1 million resulted primarily
from higher marketing expenses of $9.9 million; an increase in performance-based
compensation of $6.1 million; an increase in payroll related expenses of $2.8
million primarily due to the non-reoccurrence of the furloughing of employees
and temporary salary reductions during a portion of the prior year period in
response to the COVID-19 pandemic and an increase in credit card fees of $0.6
million due to higher sales in the current year period as compared to the prior
year period.
International Watch and Accessory Brands Operating Income/(Loss)
In the International locations of the Watch and Accessory Brands segment, for
the six months ended July 31, 2021 the Company recorded operating income of
$28.0 million, which includes $30.8 million of certain intercompany profits
related to the Company's International supply chain operations. For the six
months ended July 31, 2020 the Company recorded an operating loss of $56.7
million in the International locations of the Watch and Accessory Brands segment
which included goodwill impairment charges of $56.2 million. Without this
charge, for the six months ended July 31, 2020, operating loss would have been
$0.5 million, which included $22.3 million of certain intercompany profits
related to the Company's supply chain operations. In addition to the goodwill
impairment charge, the increase in operating income was primarily related to
higher gross profit of $32.7 million, partially offset by higher SG&A expenses
of $4.2 million. The SG&A expenses for the prior year period included corporate
initiatives charges primarily in response to the COVID-19 pandemic of $3.3
million consisting of $1.6 million in severance and payroll related, $1.5
million in write-off of unrefunded trade show deposits and $0.2 million in other
restructuring charges. Without these charges SG&A expense would have increased
$7.5 million. The increase in gross profit of $32.7 million was due to higher
net sales combined with a higher gross margin percentage. The underlying
increase in SG&A expenses of $7.5 million resulted primarily from higher
marketing expenses of $6.8 million; an increase in payroll related expenses of
$0.8 million primarily due to the non-reoccurrence of the furloughing of
employees and temporary salary reductions during a portion of the prior year
period in response to the COVID-19 pandemic and an increase sales commissions
and credit card fees of $0.7 million due to higher sales in the current year
period as compared to the prior year period. The increase in SG&A expenses was
partially offset by a decrease of $0.5 million in customer and sales promotions.
Fluctuation in foreign currency exchange rates positively impacted operating
income by $2.6 million when compared to the prior year period.
Company Stores Operating Income/(Loss)
The Company recorded operating income of $13.4 million and operating loss of
$1.5 million in the Company Stores segment for the six months ended July 31,
2021 and 2020, respectively. The improvement in operating income of $14.9
million was primarily related to higher gross profit of $20.8 million mainly due
to higher sales and a higher gross margin percentage, partially offset by a $5.9
million increase in SG&A expenses. The increase in SG&A expenses was primarily
due to an increase in payroll related expenses of $2.1 million primarily due to
company stores being open throughout the period (as compared to the significant
closures during the prior year period); higher marketing expenses of $1.8
million; an increase in credit card fees and sales commissions of $0.8 million
due to higher sales in the current year period as compared to the prior year
period and an increase in performance-based compensation of $0.4 million. As of
July 31, 2021, and 2020, the Company operated 49 and 47 retail outlet locations,
respectively.
Other Non-Operating Income
The Company recorded other income of $0.4 million primarily due to the final
settlement related to a sale of a building in an international location in the
prior year period and the non-service components of the Company's Swiss pension
plan for the six months ended July 31, 2021.
The Company recorded a gain on sale of a non-operating asset of $1.3 million
related to a sale of a building in an international location for the six months
ended July 31, 2020.
Interest Expense
Interest expense was $0.4 million and $0.9 million for the six months ended July
31, 2021 and 2020, respectively. The decrease was primarily due to lower
weighted average borrowings outstanding under the Company's revolving credit
facility partially offset by a higher weighted average interest rate and higher
unused credit line fees during the six months ended July 31, 2021 as compared to
the six months ended July 31, 2020.
Income Taxes
The Company recorded an income tax provision of $8.6 million and an income tax
benefit of $33.9 million for the six months ended July 31, 2021 and 2020,
respectively.
The effective tax rate was 22.9% and 17.8% for the six months ended July 31,
2021 and 2020, respectively. The significant components of the effective tax
rate changed primarily due to prior year impairments of the portion of goodwill
of the Watch and Accessory Brands reporting unit which is not tax deductible and
the recording of valuation allowances on certain foreign deferred tax assets in
the current year, partially offset by the CARES Act NOL Carryback Provision in
the prior year.
32
--------------------------------------------------------------------------------
Net Income/(Loss) Attributable to Movado Group, Inc.
The Company recorded net income attributable to Movado Group, Inc. of $28.8
million and net loss attributable to Movado Group, Inc. of $156.6 million, for
the six months ended July 31, 2021 and 2020, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that cash flows from operations, including the impact of
the Company corporate initiatives, combined with existing cash on hand and
amounts available under its credit lines provide adequate funds to support its
operating, capital and debt service requirements for the next twelve months
subsequent to the issuance of these financial statements. During fiscal 2021 the
Company's cash generated from operations was negatively impacted due to
widespread closures of the Company's retail locations and the Company's
wholesale customers' stores as a result of the COVID-19 pandemic. The Company
entered this period of uncertainty with a healthy liquidity position, and it
took actions to enhance the Company's financial liquidity and flexibility,
including minimizing all non-essential operating expenses (including marketing,
travel and consulting services), reevaluating all capital expenditures,
furloughing approximately 80% of the Company's North American workforce during
March through June 2020 and temporarily reducing the work-rate of international
employees while applying for available government payroll subsidies in
accordance with local government guidelines and programs, suspending the
Company's share repurchase program and regular quarterly dividend during fiscal
2021, reducing salaries and suspending Board of Director fees from April through
June 2020, amending license agreements to reduce its royalty obligations in
fiscal 2021, and negotiating rent deferrals or other arrangements in respect of
its rent obligations for its Company Stores and certain other leases. As a
precautionary measure, the Company borrowed an additional $30.9 million under
its revolving credit facility in March 2020 and amended its revolving credit
facility to modify some of its financial covenants. However, during the first
quarter of fiscal 2022, certain of these modifications were eliminated as a
result of the Company's achievement of certain milestones as of and for the
periods ending January 31, 2021, as described below. During fiscal 2021, the
Company repaid $64.5 million under its revolving credit facility and repaid an
additional $21.1 million during the first six months of fiscal 2022. At July 31,
2021, zero remained outstanding under the Company's revolving facility. Although
the Company believes it has adequate sources of liquidity over the long term,
continued uncertainty surrounding the COVID-19 pandemic, an economic recession
or a slow recovery could adversely affect the Company's business and liquidity.
At July 31, 2021 the Company had working capital of $369.4 million as compared
to $324.1 million at July 31, 2020. The increase in working capital was
primarily the result of an increase in accounts receivable resulting primarily
from higher sales and an increase in cash of $29.5 million partially offset by
an increase in accounts payable. The Company defines working capital as the
difference between current assets and current liabilities.
The Company had $22.7 million of cash provided by operating activities for the
six months ended July 31, 2021 as compared to $11.4 million of cash used in
operating activities for the six months ended July 31, 2020. Cash provided by
operating activities for the six months ended July 31, 2021 included net income
attributable to the Movado Group, Inc. of $28.8 million, positively adjusted by
$12.0 million related to non-cash items. Cash provided by operating activities
for the six months ended July 31, 2021 included an increase in accounts payable
of $18.0 million primarily as a result of timing of payments and a decrease in
income taxes receivable of $18.0 million due to a receipt of a U.S. federal
income tax refund. Cash used in operating activities included an increase in
investment in inventories of $33.8 million primarily to support sales growth, an
increase in trade receivables of $13.2 million as a result of higher sales, a
decrease in income taxes payable of $6.3 million primarily due to the timing of
payments and a decrease in accrued payroll of $4.1 million primarily as a result
of payments of performance-based compensation in addition to severance payments
as a result of the Company's corporate initiatives.
Cash used in investing was $1.9 million for the six months ended July 31, 2021
as compared to $0.6 million for the six months ended July 31, 2020. The cash
used in the six months ended July 31, 2021 was primarily related to capital
expenditures of $1.8 million primarily due to the Company's opening of two new
stores in Canada, website platform upgrades and the construction of
shop-in-shops at some of the Company's wholesale customers. The prior year
period included proceeds from a sale of a non-operating asset in Switzerland of
$1.3 million.
Cash used by financing activities was $43.8 million for the six months ended
July 31, 2021 as compared to cash used by financing activities of $6.7 million
for the six months ended July 31, 2020. The cash used in the six months ended
July 31, 2021 included repayment of bank borrowings of $21.1 million, $11.6
million in dividends paid ($2.3 million of which had been declared in January
2021), $10.0 million in stock repurchased in the open market and $1.7 million of
shares repurchased as a result of the surrender of shares in connection with the
vesting of certain stock awards, partially offset by $0.7 million received in
connection with stock options exercised. Cash used in financing activities for
the six months ended July 31, 2020 included net repayment of bank borrowings of
$5.9 million.
On October 12, 2018, the Company, together with Movado Group Delaware Holdings
Corporation, Movado Retail Group, Inc. and Movado LLC (together with the
Company, the "U.S. Borrowers"), each a wholly owned domestic subsidiary of the
Company, and Movado Watch Company S.A. and MGI Luxury Group S.A. (collectively,
the "Swiss Borrowers" and, together with the U.S. Borrowers, the "Borrowers"),
each a wholly owned Swiss subsidiary of the Company, entered into an Amended and
Restated Credit Agreement
33
--------------------------------------------------------------------------------
(the "Credit Agreement") with the lenders party thereto and Bank of America,
N.A. as administrative agent (in such capacity, the "Agent"). The Credit
Agreement amends and restates the Company's prior credit agreement dated as of
January 30, 2015 and extends the maturity of the $100.0 million senior secured
revolving credit facility (the "Facility") provided thereunder to October 12,
2023. The Facility includes a $15.0 million letter of credit subfacility, a
$25.0 million swingline subfacility and a $75.0 million sublimit for borrowings
by the Swiss Borrowers, with provisions for uncommitted increases to the
Facility of up to $50.0 million in the aggregate subject to customary terms and
conditions.
On June 5, 2020, the Company and its lenders entered into an amendment (the
"Second Amendment") to the Credit Agreement effective as of April 30, 2020.
Among other things, the Second Amendment provided for temporary relief with
respect to the financial maintenance covenants in the Credit Agreement starting
April 30, 2020 while also temporarily tightening certain covenants and
temporarily increasing the interest rate and commitment fee. These temporary
changes to the Credit Agreement ended as a result of the Company's achievement
of certain financial milestones as of and for the periods ending January 31,
2021. In addition, the Second Amendment permanently increased the LIBOR floor
for loans under the Credit Agreement from 0% to 1.00% and permanently reduced
the minimum EBITDA financial covenant level to $35.0 million starting with the
four-quarter period ending July 31, 2021.
The foregoing summary of the Second Amendment is qualified by reference to the
full text of the amendment, which is attached as Exhibit 4.1 to the Company's
quarterly report on Form 10-Q for the quarter ended April 30, 2020 and
incorporated herein by reference.
As of July 31, 2021, and July 31, 2020, there was zero and $48.3 million (of
which all but $10 million was denominated in Swiss Francs), respectively, in
loans outstanding under the Facility. Availability under the Facility was
reduced by the aggregate number of letters of credit outstanding, issued in
connection with retail and operating facility leases to various landlords and
for Canadian payroll to the Royal Bank of Canada, totaling approximately $0.3
million at both July 31, 2021 and July 31, 2020. At July 31, 2021, the letters
of credit have expiration dates through May 31, 2022. As of July 31, 2021, and
July 31, 2020, availability under the Facility was $99.7 million and $51.4
million, respectively. For additional information regarding the Facility, see
Note 8 - Debt and Lines of Credit to the Consolidated Financial Statements.
The Company had weighted average borrowings under the facility of $6.5 million
and $71.5 million, with a weighted average interest rate of 2.00% and 2.60%
during the three months ended July 31, 2021 and 2020, respectively. The Company
had weighted average borrowings under the facility of $9.8 million and $68.6
million, with a weighted average interest rate of 2.79% and 1.92%, during the
six months ended July 31, 2021 and 2020, respectively.
A Swiss subsidiary of the Company maintains unsecured lines of credit with an
unspecified maturity with a Swiss bank. As of July 31, 2021, and 2020, these
lines of credit totaled 6.5 million Swiss Francs for both periods, with a dollar
equivalent of $7.2 million and $7.1 million, respectively. As of July 31, 2021,
and 2020, there were no borrowings against these lines. As of July 31, 2021 and
2020, two European banks had guaranteed obligations to third parties on behalf
of two of the Company's foreign subsidiaries in the dollar equivalent of $1.3
million for both periods, in various foreign currencies, of which $0.6 million,
in both periods, was a restricted deposit as it relates to lease agreements.
Cash paid for interest, including unused commitments fees, was $0.3 million and
$0.8 million for the six-month period ended July 31, 2021 and July 31, 2020,
respectively.
From time to time the Company may make minority investments in growth companies
in the consumer products sector, including certain of the Company's suppliers
and customers, as well as in venture capital funds that invest in such
companies. During the second quarter of fiscal 2022, the Company committed to
invest up to $1,000,000 in a venture capital fund that makes investments in
securities of portfolio companies whose primary business focus is accelerating
innovation in retail and consumer goods. The Company expects to be called upon
to satisfy its first capital call in respect of this commitment by the end of
fiscal 2022.
On January 11, 2021, with the consent of its bank group, the Company's Board of
Directors declared a cash dividend of $0.10 per share, which was paid on
February 5, 2021 in the amount of $2.3 million, to shareholders of record on
January 21, 2021. The Company paid additional cash dividends of $0.20 per share
or $4.6 million during the three months ended April 30, 2021 and $0.20 per share
or $4.7 million during the three months ended July 31, 2021. The Company did not
pay cash dividends during the six months ended July 31, 2020. Although the
Company currently expects to continue to declare cash dividends in the future,
the decision of whether to declare any future cash dividend, including the
amount of any such dividend and the establishment of record and payment dates,
will be determined, in each quarter, by the Board of Directors, in its sole
discretion.
34
--------------------------------------------------------------------------------
On August 29, 2017, the Board approved a share repurchase program under which
the Company was authorized to purchase up to $50.0 million of its outstanding
common stock from time to time. This authorization expired on August 29, 2020.
On March 25, 2021, the Board approved a share repurchase program under which the
Company is authorized to purchase up to $25.0 million of its outstanding common
stock from time to time, depending on market conditions, share price and other
factors. Under this share repurchase program, the Company is permitted to
purchase shares of its common stock through open market purchases, repurchase
plans, block trades or otherwise through September 30, 2022. During the six
months ended July 31, 2021, the Company repurchased a total of 334,000 shares of
its common stock under the share repurchase program at a total cost of $10.0
million, or an average of $29.87 per share. At July 31, 2021, $15.0 million
remains available for purchase under the Company's repurchase program.
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet financing or unconsolidated
special-purpose entities.
Accounting Changes and Recent Accounting Pronouncements
See Note 3- Recent Accounting Pronouncements to the accompanying unaudited
Consolidated Financial Statements for a description of certain accounting
changes and recent accounting pronouncements which may impact the Company's
Consolidated Financial Statements in future reporting periods.
© Edgar Online, source Glimpses