Tumi Holdings Announces Financial Results For The Second Quarter Of 2012

Tumi Holdings, Inc. (NYSE: TUMI), the leading global brand of premium travel, business and lifestyle products and accessories, today announced its financial results for the second quarter ended June 24, 2012.

For the second quarter of 2012:
  • Net sales increased 21.8% to $95.8 million from $78.7 million in the second quarter ended June 26, 2011.
  • Direct-to-Consumer North America comparable store sales (including e-commerce sales) increased 8.4%, following an increase of 32.1% in the second quarter of 2011. Excluding e-commerce sales, Direct-to-Consumer North America comparable store sales increased 7.2%, following an increase of 29.1% in the second quarter of 2011.
  • Direct-to-Consumer International comparable store sales in local currency increased 12.5% excluding e-commerce sales, and 16.2% including e-commerce sales. In U.S. dollars, Direct-to-Consumer International comparable store sales increased 1.3% excluding e-commerce sales and 4.5% including e-commerce sales.
  • Gross profit increased by 25.6% to $54.7 million from $43.6 million in the second quarter of 2011. Gross margin was 57.1% compared to 55.4% in the second quarter of 2011.
  • Operating income was $12.0 million compared to $13.6 million in the second quarter of 2011. Tumi paid a $5.5 million ($3.1 million after tax) one-time special bonus to its Chief Executive Officer, President and Director in connection with the successful completion of its IPO in the second quarter of 2012. Excluding this one-time special bonus expense, operating income increased 29.2% to $17.5 million, or 18.3% of net sales, compared to $13.6 million, or 17.3% of net sales, in the second quarter of 2011.
  • Net income was $6.5 million, or $0.10 per diluted share based on 63.8 million diluted weighted average common shares outstanding, as compared to $2.3 million, or $0.04 per diluted share, based on 52.5 million diluted weighted average common shares outstanding in the second quarter of 2011.
  • Net income before preferred dividend expense (non-cash), a non-GAAP financial measure, which excluded a $1.6 million non-cash dividend expense on mandatorily redeemable preferred stock and preferred equity interests, was $8.1 million, or $0.13 per diluted share. Excluding the aforementioned one-time special bonus expense of $3.1 million after tax, net income before preferred dividend expense (non-cash) was $11.2 million or $0.18 per diluted share in the second quarter of 2012. In the second quarter of 2011, net income before preferred dividend expense (non-cash), which excluded $5.7 million of non-cash dividend expense on mandatorily redeemable preferred stock and preferred equity interests, was $8.0 million, or $0.15 per diluted share.
  • During the second quarter of 2012, Tumi opened 7 new stores.
  • At June 24, 2012, Tumi operated 106 company-owned stores.

Jerome Griffith, Chief Executive Officer, President and Director, commented, “We were extremely pleased with the continued momentum in our business during the second quarter. Our results reflect our ability to capitalize on our market position as an iconic global premium lifestyle brand to broaden our product offering beyond travel related merchandise and to expand into international markets where we are achieving exceptional growth despite difficult market conditions. Our recent successes have increased our conviction that significant long-term opportunities lie ahead.”

For the first six months ended June 24, 2012:

  • Net sales for the first six months of 2012 increased 21.6% to $175.8 million from $144.6 million in the same period of 2011.
  • Gross profit for the first six months of 2012 increased 24.0% to $100.1 million, or 56.9% as a percentage of net sales, from $80.7 million, or 55.8% as a percentage of net sales in the same period of 2011.
  • Operating income increased 10.2% to $25.3 million from $23.0 million in the first six months of 2012. Excluding the aforementioned one-time special bonus of $5.5 million, operating income grew 34.2% to $30.8 million, or 17.5% of net sales, compared to $23.0 million, or 15.9% of net sales, in the first six months of 2011.
  • Net income in the first six months of 2012 was $9.4 million, or $0.16 per diluted share as compared to $2.2 million, or $0.04 per diluted share for the first six months of 2011.
  • Net income before preferred dividend expense (non-cash), a non-GAAP financial measure, which excluded non-cash dividend expense on mandatorily redeemable preferred stock and preferred equity interests of $7.9 million, was $17.3 million or $0.30 per diluted share for the first six months of 2012. Excluding the aforementioned one-time special bonus expense of $3.1 million after tax, net income before preferred dividend expense (non-cash) was $20.4 million, or $0.35 per diluted share for the first six months of 2012. In the first six months of 2011, net income before preferred dividend expense (non-cash) was $13.6 million, or $0.26 per diluted share, which excluded $11.4 million of non-cash dividend expense on mandatorily redeemable preferred stock and preferred equity interests.

Balance Sheet Highlights as of June 24, 2012:

Cash and cash equivalents were $20.8 million compared with $22.2 million as of June 26, 2011. Inventories were $71.4 million compared with $51.2 million as of June 26, 2011. The increase in inventory was primarily due to increased production to support new product introductions and store growth.

Outlook

For fiscal 2012, net sales are expected to be in the range of $390 million to $395 million. This estimate assumes a comparable store sales growth in the mid to high single digit range. Net income is expected to be in the range of $33.0 million to $35.0 million. Diluted earnings per share are expected to be in the range of $0.50 to $0.53 per diluted share. This estimate assumes diluted weighted average common shares outstanding of approximately 63.3 million. Net income before preferred dividend expense (non-cash), a non-GAAP measure, which excludes non-cash dividend expense on mandatorily redeemable preferred stock and preferred equity interests, and assuming a normalized 39% tax rate, is expected to be in the range of $40.0 million to $42.0 million. On a diluted earnings per share basis, this represents a range of $0.63 to $0.66 per share. Excluding the aforementioned one-time special bonus expense of $3.1 million after tax, net income before preferred dividend expense (non-cash) is expected to be in the range of $43.0 million to $45.0 million. On a diluted earnings per share basis, this represents a range of $0.67 to $0.70 per share.

Capital expenditures for fiscal 2012 are expected to be in the range of $17.0 million to $20.0 million.

Conference Call Information

Tumi Holdings, Inc. will host a conference call to discuss second quarter results today, August 6, 2012, at 4:30 p.m. ET. The general public can access the call by dialing 1-866-804-6927 (domestic) or 1-857-350-1673 (international). The passcode is 42470557. Please dial in 5 minutes before the start of the call. The conference call will also be webcast live in the Investor Relations section of www.tumi.com. A replay of the call will be available through August 13, 2012; to access the replay, dial 1-888-286-8010 for domestic callers or 1-617-801-6888 for international callers and enter access code 91043570. The webcast will be accessible on the website for approximately 90 days after the call.

About Tumi

Tumi is the leading global brand of premium travel, business and lifestyle products and accessories. The brand is sold in approximately 200 stores from New York to Paris to London and Tokyo, as well as in the world’s top department, specialty, and travel retail stores in over 70 countries.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Tumi’s current views with respect to, among other things, future events and performance. These statements may discuss net sales, gross margin, operating expenses, operating income, net income, cash flow, financial condition, impairments, expenditures, growth, strategies, plans, achievements, dividends, capital structure, organizational structure, future store openings, market opportunities and general market and industry conditions. Tumi generally identifies forward-looking statements by words such as “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” “predict,” “believe,” “seek,” “continue,” “outlook,” “may,” “might,” “will,” “should,” “can have,” “likely” or the negative version of these words or comparable words. Forward-looking statements are based on beliefs and assumptions made by management using currently available information. These statements are only predictions and are not guarantees of future performance, actions or events. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management’s underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include those set forth under “Risk Factors” in Tumi’s filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended March 25, 2012, filed with the SEC on May 23, 2012. Forward-looking statements speak only as of the date on which they are made. Tumi expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
 
 

TUMI HOLDINGS, INC., SUBSIDIARIES AND CONTROLLED AFFILIATE

Consolidated Statements of Operations

(In thousands, except share and per share data)
             
Three Months Ended Six Months Ended
June 24, 2012     June 26, 2011 June 24, 2012     June 26, 2011
(unaudited) (unaudited)
Net sales $ 95,823     $ 78,676 $ 175,844     $ 144,593
Cost of sales   41,130     35,114     75,746     63,893  
Gross margin   54,693     43,562     100,098     80,700  
OPERATING EXPENSES
Selling 6,092 4,985 11,080 9,306
Marketing 3,574 2,749 6,314 5,723
Retail operations 19,187 16,006 36,336 30,460
General and administrative   13,806     6,238     21,058     12,244  
Total operating expenses   42,659     29,978     74,788     57,733  
Operating income   12,034    

13,584
    25,310     22,967  
OTHER (EXPENSES) INCOME
Interest expense (350 ) (735 ) (867 ) (1,516 )

Dividend expense on mandatorily redeemablepreferred stock and preferred equity interests
(1,606 ) (5,715 ) (7,892 ) (11,429 )
Earnings from joint venture investment 407 255 671 282
Foreign exchange (losses) gains (684 ) (155 ) (695 ) 211
Other non-operating income   55     85     227     99  
Total other expenses   (2,178 )   (6,265 )   (8,556 )   (12,353 )
Income before income taxes 9,856 7,319 16,754 10,614
Provision for income taxes   3,371     5,019     7,372     8,397  
Net income $ 6,485   $ 2,300   $ 9,382   $ 2,217  
Weighted average common shares outstanding:
Basic   63,838,736     52,536,224     58,380,136     52,536,224  
Diluted   63,838,825     52,536,224     58,380,182     52,536,224  
Basic earnings per common share $ 0.10   $ 0.04   $ 0.16   $ 0.04  
Diluted earnings per common share $ 0.10   $ 0.04   $ 0.16   $ 0.04  
 
 

TUMI HOLDINGS, INC., SUBSIDIARIES AND CONTROLLED AFFILIATE

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)
           
June 24, 2012 December 31, 2011
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 20,822 $ 32,735

Accounts receivable, less allowance for doubtful accounts of approximately$492 and $462 at June 24, 2012 and December 31, 2011, respectively
25,840 22,833
Other receivables 1,793 1,724
Inventories 71,428 60,456
Prepaid expenses and other current assets 3,835 3,056
Prepaid income taxes 5,693
Deferred offering costs 1,996
Deferred tax assets, current   2,218   2,218
Total current assets   131,629   125,018
Property, plant and equipment, net 39,718 36,500
Deferred tax assets, noncurrent 2,046 2,046
Joint venture investment 2,793 2,122
Goodwill 142,773 142,773
Intangible assets, net 131,082 131,219

Deferred financing costs, net of accumulated amortization of $2,676 and $2,539 atJune 24, 2012 and December 31, 2011, respectively
784 920
Other assets   4,840   5,743
Total assets $ 455,665 $ 446,341
 
 

TUMI HOLDINGS, INC., SUBSIDIARIES AND CONTROLLED AFFILIATE

Condensed Consolidated Balance Sheets (cont’d)

(In thousands, except share and per share data)
           
June 24, 2012 December 31, 2011
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 36,231 $ 27,308
Accrued expenses 23,499 26,683
Current portion of long-term debt 12,000
Income taxes payable       4,324  
Total current liabilities   59,730     70,315  
Revolver 58,000
Long-term debt 52,000
Other long-term liabilities 6,684 6,257
Mandatorily redeemable preferred stock and preferred equity interests 251,429
Deferred tax liabilities   47,623     47,623  
Total liabilities   172,037     427,624  
Commitments and contingencies
STOCKHOLDERS’ EQUITY

Common stock—$0.01 par value; 350,000,000 shares authorized, 68,144,473issued and 67,866,667 shares outstanding as of June 24, 2012; 52,536,252authorized and issued and 52,536,224 shares outstanding as of December 31, 2011
681 525

Preferred stock—$0.01 par value; 75,000,000 shares authorized and no sharesissued or outstanding as of June 24, 2012; no shares authorized, issued oroutstanding as of December 31, 2011
Additional paid-in capital 308,667 48,968
Treasury stock, at cost (4,874 ) (174 )
Accumulated deficit (20,235 ) (29,617 )
Accumulated other comprehensive loss   (611 )   (985 )
Total stockholders’ equity   283,628     18,717  
Total liabilities and stockholders’ equity $ 455,665   $ 446,341  
 
 

TUMI HOLDINGS, INC., SUBSIDIARIES AND CONTROLLED AFFILIATE

Segment Results

(In thousands)
                         
Direct-to-

Consumer

North

America
Direct-to-

Consumer

International
Indirect-to-

Consumer

North

America
Indirect-to-

Consumer

International
Non-Allocated

Corporate

Expenses
Consolidated

Totals
 
Three Months Ended June 24, 2012
Net sales $ 41,914 $ 3,896 $ 23,639 $ 26,374 $ $ 95,823
Operating income (loss) 13,556 (107 ) 8,626 8,230 (18,271 ) 12,034
 
Three Months Ended June 26, 2011
Net sales $ 33,957 $ 3,862 $ 19,166 $ 21,691 $ $ 78,676
Operating income (loss) 10,145 276 6,311 6,349 (9,497 ) 13,584
 
 
Direct-to-

Consumer

North

America
Direct-to-

Consumer

International
Indirect-to-

Consumer

North

America
Indirect-to-

Consumer

International
Non-Allocated

Corporate

Expenses
Consolidated

Totals
 
Six Months Ended June 24, 2012
Net sales $ 76,302 $ 7,125 $ 40,695 $ 51,722 $ $ 175,844
Operating income (loss) 22,811 (397 ) 15,118 16,324 (28,546 ) 25,310
 
Six Months Ended June 26, 2011
Net sales $ 60,083 $ 7,245 $ 35,899 $ 41,366 $ $ 144,593
Operating income (loss) 16,590 396 12,362 12,292 (18,673 ) 22,967
 
 

TUMI HOLDINGS, INC., SUBSIDIARIES AND CONTROLLED AFFILIATE

Reconciliation of Net Income to Net Income Before Preferred Dividend Expense (Non-Cash)

(In millions)
 
             
Three Months Ended Six Months Ended
       
June 24, 2012 June 26, 2011 June 24, 2012 June 26, 2011
 
Net income 6.5 2.3 9.4 2.2
 

Dividend expense on mandatorily redeemable preferredstock and preferred equity interests
1.6 5.7 7.9 11.4
 
Net income before preferred dividend expense (non-cash) 8.1     8.0       17.3     13.6
 
 

Non-GAAP Financial Measure

Net income before preferred dividend expense (non-cash) is a non-GAAP financial measure and is defined as net income plus dividend expense on mandatorily redeemable preferred stock and preferred equity interests. Net income before preferred dividend expense (non-cash) is an important supplemental measure for Tumi’s internal reporting, including for its board of directors and management, and is a key measure used to evaluate profitability and operating performance. Net income before preferred dividend expense (non-cash) provides investors and other users of Tumi’s financial information, when viewed in conjunction with its condensed consolidated financial statements, consistency and comparability with Tumi’s past financial performance, facilitates period-to-period comparisons of operating performance and facilitates comparisons with other companies. Tumi uses this metric in conjunction with GAAP operating performance measures as part of its overall assessment of its performance. Undue reliance should not be placed on this measure as Tumi’s only measure of operating performance. Net income before preferred dividend expense (non-cash) should not be viewed as a substitute for net income.

Comparable Store Sales Growth

Comparable store sales are calculated based on Tumi’s company-owned stores that have been open for at least a full calendar year as of the end of Tumi’s annual reporting period. For example, a store opened in October 2011 will not impact the comparable store comparison until January 1, 2013.

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